How to use your pension fund (OP) to finance your start-up: what are the steps?

Thu, 02.11.2023, 15:00

If you are planning to launch your business, you will probably need funding to cover the costs of communication, marketing, purchasing equipment and renting premises. You might decide to withdraw your OP (the second pillar of your occupational pension scheme) to build up your capital. In this guide you will find out how it works, which legal forms are eligible and what conditions have to be met for this start-up financing operation.

What does the OP provide for the Swiss pension system?
The OP, or occupational pension plan in Switzerland, is the 2nd pillar of the pension system, supplementing the OASI/DI. Contributions are made by employers and employees and cover retirement, disability and death. The first two pillars of the system cover about 60% of the last salary at retirement, so private pension provision (3rd pillar) is recommended. The OP aims to maintain the same standard of living in retirement and in the event of disability and to ensure the financial security of the next of kin in the event of death. All workers are covered from the age of 17 against disability and death, while retirement benefits are guaranteed from the age of 24 until retirement.
 
Plan ahead before withdrawing the OP
You can withdraw your 2nd pillar to finance the start-up of your business, but it is important to bear in mind that you are using your future retirement income in this way. It is therefore crucial that your plan is well thought out, sensible and promising. Before making a decision, it is crucial to draw up a thorough business plan and clearly frame the project. It is important to analyse the impact on your retirement situation. If all signs are positive, you can withdraw the OP and give your company every chance of success through investments that stimulate its growth. You can withdraw all or only part of your pension capital, depending on your needs and the type of business you are planning. However, it is crucial to assess your needs well before withdrawing OP, as only one withdrawal is allowed. If you withdraw OP to start your own business, you also lose your death and disability insurance. To compensate for these gaps, you can take out life insurance or supplement your 3rd pillar bank account with life insurance.
 
To withdraw the 2nd pillar, you must fulfil certain conditions diligently and competently:
To withdraw OP, you must prove that you are no longer employed and that your annual income from employment does not exceed CHF 21,330. You must also obtain self-employed status by providing proof to the OASI or SUVA. Entry in the commercial register is not always sufficient. Finally, it is necessary to opt for a suitable legal form, such as a sole proprietorship or a general partnership. In summary, to withdraw from the OP you must seriously meet these conditions, but with a sense of humour!
 
Other conditions for withdrawing OP money
In order to withdraw your OP money, you must fulfil a few other conditions. If you are married or in a registered partnership, you must obtain the written consent of your partner or spouse to do this. Also, if you have purchased OP contribution years in the last three years, you will not be able to withdraw your second pillar.
 
Be careful when withdrawing your OP
When you withdraw your pension capital, the tax authorities consider it as income, so you will be taxed at a variable rate depending on the canton where you have established your business, regardless of your taxable income. However, if you do not reinvest this sum in the business, it will be considered as part of your personal assets and will be taxed as such each year. Beware also of unpaid debts. The amount withdrawn is considered part of your assets, which means it can be seized to repay an outstanding debt. You can invest this sum as you wish and, depending on your strategy, use it as start-up capital for your new business or as a monthly salary.

Turn to a professional to withdraw the OP
To withdraw OP as a self-employed person, it is essential to meet the requirements of the OASI and SUVA, with which we at IFJ are familiar. We can help you set up your business to facilitate the process. Administrative formalities can be tedious and time-consuming, which is why it makes sense to contact qualified professionals like IFJ.
 
Starting a start-up with IFJ
In conclusion, drawing on your pension fund to launch your start-up is a serious decision that requires careful planning and compliance with specific conditions. But do not forget that you do not have to embark on this adventure alone. IFJ's start-up service is here to guide you every step of the way.  Your financial future starts with the creation of your business, and IFJ is here to help you get there.
 
Our process is simple: fill out an online form to tell us about your project, provide the essential information for setting up your business and our advisors will answer all your questions during the process. IFJ will take care of all the paperwork and in just 7 days your sole proprietorship will be securely established with all the documents ready.