Taxes play an important role in the decision between a pension and a lump-sum withdrawal.
The pension income is subject to income tax, the level of which depends in particular on your and your place of residence.
A lump-sum withdrawal from the pension fund, by contrast, is taxed once with the so-called lump-sum benefit tax. Its level depends in particular on the amount of capital withdrawn and on your place of residence. Indirect tax consequences can arise in addition: the withdrawn assets are generally subject to wealth tax, and the income from them (e.g. interest and dividends) is in principle liable to income tax.
From a tax perspective, it must be taken into account that with a pension the income tax falls due on this income every year. The lump-sum benefit tax on the lump-sum withdrawal, on the other hand, is levied only once at payout. To examine the two options, the annual tax burden of the pension therefore has to be projected over the expected payout period and compared with the one-off lump-sum benefit tax.
With a lump-sum withdrawal, taxes are not only due once on the payout. The capital paid out generally remains invested for many years. During this time it increases your taxable assets and is subject to wealth tax. At the same time, the invested assets can generate income such as interest or dividends. This is in principle regarded as taxable income.
In order to reflect the financial effects of a lump-sum withdrawal as realistically as possible, our calculation therefore takes into account both the one-off lump-sum payout tax and the ongoing wealth and income taxes on the expected investment income.
What is the optimal choice between pension and lump sum from a tax perspective? There is no blanket answer. It depends on your personal situation, your place of residence and the level of your benefits.
With our tool you can compare the tax effects of a pension and a lump-sum withdrawal over the entire expected payout period. It should be borne in mind that income tax, wealth tax and the lump-sum benefit tax are all progressive. As income, assets or lump-sum withdrawals rise, the tax burden therefore increases disproportionately.
Because of this tax progression alone, it can make sense to choose a combination of pension and lump sum rather than a pure pension or a pure lump sum. The optimal choice depends in particular on your place of residence and your canton of residence.
The tax framework may also change in future. Given the political discussions about a possible increase in the federal lump-sum benefit tax, an additional tax burden on lump-sum withdrawals cannot be ruled out in future.