How is Pillar 2 (BVG occupational pension) taxed in Switzerland?

Pillar 2 is the mandatory occupational pension in Switzerland, covering employees earning above CHF 22,050/year. Employer and employee contributions are split roughly equally — combined contributions range from 7% to 18%+ of the coordinated salary depending on age. Contributions are not subject to income tax while being made.

At retirement, you typically have the choice of taking your pension capital as a lifelong annuity, a lump sum, or a combination. Annuity payments are taxed as ordinary income in the year received. Lump-sum withdrawals are taxed separately at a reduced rate, similar to Pillar 3a but usually at a lower rate due to larger amounts.

If you leave Switzerland permanently, you can withdraw your Pillar 2 capital. EU/EFTA nationals can only withdraw the over-mandatory portion (above the BVG minimum); the mandatory portion stays locked until retirement age. Non-EU/EFTA nationals can withdraw the full balance. Early withdrawal to fund a primary property purchase is also permitted.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.