The recent proposal by the Federal Council to increase the tax on capital withdrawals from the 2nd and 3rd pillar pension schemes has sparked serious concern among Swiss citizens — particularly those who rely on occupational and private pensions to build wealth and benefit from tax advantages. This initiative may be seen as a betrayal by those who have contributed for decades, in the hope of stable and predictable taxation.
Since the introduction of the Swiss occupational pension system (LPP/BVG) in 1985, Swiss citizens have been encouraged to save for retirement. The year 2025 marks a major milestone: for the first time, retirees will reach retirement age with a full 40 years of contributions, as originally intended by the law. Yet, the proposal to raise taxes on capital withdrawals could upend the financial plans of many savers.
Today, an increasing number of Swiss citizens choose capital withdrawal over annuity payments, seeking greater control over their wealth. This trend is largely driven by low conversion rates, which have made annuities less attractive. By opting for a lump-sum withdrawal, individuals gain more flexibility and freedom in managing their funds.
The FDP (Free Democratic Party), which opposes this tax hike, has mobilised over 6,700 citizens through a participatory platform. The party warns that the proposed measure would heavily penalise the middle class and has threatened to launch a referendum if it is passed by Parliament. The union Travail.Suisse and several cantons — including Geneva and Vaud — have also criticised the proposal, calling it retroactive and contrary to the original spirit of encouraging private and occupational pension savings.
Piguet Galland believes that this proposal could erode public trust in the pension system and unfairly penalise those who have chosen to save. We invite you to engage with us on these issues and share any concerns or questions you may have.
The proposal now lies in the hands of the Federal Council, which may decide to abandon it, amend it, or submit it as is. Parliament will then vote on the matter.