Taxes on pension payments: no problem for the Swiss Abroad

The Swiss government is drafting a savings plan which would eliminate a popular tax relief. If approved, this could make emigration even more appealing to retirees. The government has presented an austerity package which includes many federal spending measures aimed at eliminating the budget’s structural deficit. One of the 60 proposals is aimed at increasing tax revenue – and it’s tough: the tax breaks given for second and third pillar pensions are to be abolished. Currently, those who voluntarily contribute to second pillar pension funds or third pillar private pension schemes can deduct the amount from their annual taxable income. When one then withdraws one’s savings at retirement age, it is taxed at a relatively low rate. This makes saving for a pension more attractive and makes it possible for many people to withdraw their pension later. However, the tax rate for lump-sum pension withdrawals is now to be drastically increased in this new proposal, and it has triggered notable ...