Is It Wise to Renovate the Bathroom with Pension Fund Assets?
The use of pension fund capital for the promotion of home ownership, for example renovation, is only possible to a certain extent and gives rise to a pension gap which should be addressed.
The use of pension fund capital under the promotion of home ownership (WEF) is generally possible up to a maximum of three years before retirement. In addition, this pension capital is only allowed to be used for the main residence. No money from employee benefits insurance is allowed to be used for financing standard maintenance outlays on residential property (e.g. repairs). However, the capital can be used for renovations.
A particularly important point is that an advance withdrawal can have consequences for insurance coverage in the event of death or disability under the second pillar. There will also be a pension gap later in life. The amount withdrawn in advance should be repaid up to the age of retirement or a pension solution found that addresses the gap.
Taking Taxes and Repayments into Account
In addition, one must be aware that the use of pension benefits has tax consequences. This tax burden must be financed separately and out of one's own assets. Moreover, it will only be possible to deduct purchases of pension benefits in the 2nd pillar from taxable income once again if the funds withdrawn in advance for renovations have been fully repaid. It is therefore important to consider many different aspects and requirements. Hence it is important to check all financing options for renovating in order to find the best solution.