On the journey to your dream property, your retirement savings can be a significant asset. In addition to attractive tax benefits, there are various ways in which retirement funds can be used to purchase owner-occupied real estate.
Amortisation refers to the regular repayment of a portion of the mortgage over a set period of time. The mortgage does not have to be fully amortised. A distinction is made between optional amortisation (1st mortgage) and compulsory amortisation (2nd mortgage). The 1st mortgage, which represents a loan corresponding to 66.67% or two-thirds of the value of the property, does not need to be amortised as long as financial capacity is assured. On the other hand, the 2nd mortgage on a property used for personal purposes must be amortised, either directly or indirectly, within 15 years or before retirement age at the latest.
Purchasing real estate is a long-term commitment, and you need to be able to meet the cost of your mortgage even if you retire or something happens to you (disability, death, etc.). What's more, a pension scheme is an integral part of the financing strategy, whether for building up equity or amortising the loan. Owners can choose between two repayment options: direct repayment and indirect repayment.
With direct amortisation, you make regular payments of a set amount. With each payment, your mortgage debt decreases, as does the interest you have to pay. However, this also increases your tax burden, as you can deduct less mortgage interest from your taxable income.
With indirect amortisation, you place the agreed amortisation sum in a pillar 3a pension account or on an insurance policy. At the end of the term defined with the lender, you repay all or part of the mortgage sum to be amortised. The advantage of this method lies in the tax savings, since payments into the 3rd pillar, up to a maximum of CHF 7’258.- (situation 2025), can be deducted from taxable income. The capital accumulated in the savings account 3 or insurance policy will only be taxed when the pension funds are withdrawn, separately from other income, at a reduced rate. The funds withdrawn can then be used to pay off the mortgage. The other advantage of using indirect amortisation linked to insurance policies is the possibility of covering your family while amortising your mortgage.
If you're planning to become a homeowner, but don't yet have the necessary equity, a pension analysis will help you determine how to build up the capital required for this purchase, and calculate how much time you still need to save. Even if you don't have any concrete plans to buy property, you can carry out a no-obligation pension analysis with one of our advisors. This will enable you to take stock of your current situation and project your retirement income. It also includes a risk analysis to highlight the financial consequences in the event of disability or death. We present you with detailed solutions to cover these risks.
On average, the 1st pillar (AVS) and 2nd pillar (LPP) cover around 60% of the last salary received. That's why the Swiss pension system provides for a private, optional 3rd pillar, to cover gaps in pension provision. The following contributions are possible: for salaried employees, the maximum amount of the 3rd pillar is CHF 7’258.- per year (situation 2025); for self-employed people without a pension fund, it is 20% of net income, or a maximum of CHF 36’288.- (situation 2025). These amounts can be deducted from your taxable income, resulting in substantial tax savings. Free pension provision (3rd pillar b) offers greater flexibility in terms of contribution amounts and withdrawal options, but is tax-deductible in only a few cantons (e.g. FR and GE).
By subscribing to a third pillar with an insurance company, you benefit from protection against various risks. The 3a pension plan combines a guaranteed retirement capital with coverage tailored to your needs for the risks of disability and death.
In the event of an accident or illness that partially or fully prevents you from working, two options are available to you depending on your degree of disability: either you receive a pension for a specified period, or you benefit from the waiver of premium payments. This latter option guarantees maximum security, as in the event of loss of income, the insurance covers the premium payments until you are able to return to work or until the contract ends, without affecting your savings. With a third pillar, you also benefit from life insurance, ensuring the financial protection of your loved ones. The third pillar is therefore an ideal solution for saving while planning for your retirement. However, it is important to distinguish between tied pension plans (pillar 3a) and flexible pension plans (pillar 3b), which offer distinct advantages in terms of taxation, choice of beneficiaries, savings amounts, and withdrawal flexibility. Therefore, it is essential to choose the most suitable solution to avoid any unpleasant surprises.
Do you have any questions or would you like non-binding pension advice? Resolve's advisors will explain it all to you in detail.
What is a pension fund (OP) certificate? It is a document that details all the risk benefits and retirement benefits provided by your pension fund. It contains a significant amount of important information, and it is also important to know what the actual numbers and figures mean. An explanation.
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