BERN More and more people are rushing to use the second pillar of their pension plan to purchase a primary residence in the face of high prices and limited housing stock. While this may give a boost to the economy, especially the property market, not everyone is happy with the trend.
There are three pillars to the Swiss social security system. The first is the basic mandatory insurance for all Swiss residents; the second is an occupational pension plan based on employee and employer contributions; and the third is a private investment option. When the second pillar is combined with the first pillar, a retired person could expect to receive about 60% of their final salary to help maintain their existing standard of living.
With interest rates low, some banks are limiting the amount of the second pillar that may be used to purchase property or towards paying down a mortgage. The Cantonal Bank of Bern reported to Le Matin that it no longer considers money from the second pillar to be “real equity”. Other banks may be concerned that real estate is no longer the safe investment it once was and are warning clients not to withdraw funds from the second pillar but to use it only as collateral.
The Swiss Federal Council has followed the recommendations made by the Swiss Banking Association (SBA) regarding self-regulation measures implemented by the banks.