Pension planning for cohabiting couples

Having a joint household instead of two individual households often offers cohabiting couples the chance to save on insurance. They can combine their household insurance, legal protection and liability insurance instead of having two individual policies.

It may be worth considering insurance such as death benefit insurance, especially if the couple has children together or if there are children living in the household.

If a cohabiting couple takes out a mortgage together, both partners are jointly liable for the debt and for interest payments. A written contract is not least a precaution to prevent arguments in the event of separation. When purchasing property in co-ownership, the partners decide who holds what share of the property, how much equity each person contributes to the investment, and what proportion of maintenance costs they will pay. It is important to keep the receipts for the long term. If nothing is documented, the proportions entered in the land register apply.

If one partner takes over the apartment or house after the couple separates, they are generally obliged to buy out the share of their ex-partner. If this is not possible, there is usually no alternative but to put the property up for sale.

OASI does not pay widow’s/widower’s pensions to surviving cohabiting partners.

There are no statutory regulations governing survivors’ benefits for pension funds. The situation depends on the regulations of the particular pension fund. Pension funds often pay a pension to the surviving partner if the couple has children together. If there are no children, certain conditions must be met. Often, the regulations specify that you must have been living together for at least five years or be financially dependent on your partner. Contact your pension fund to check the conditions that must be met to receive benefits on your partner’s death. In addition, a written notification to the pension fund may be required to declare your partner as a beneficiary.

It is also important to think about voluntary pension planning, for instance by making payments into pillar 3a (UBS retirement savings account / UBS retirement custody account). These accounts offer tax benefits and provide long-term security – not only for yourself, but also for your partner and children. However, your pillar 3a assets will remain blocked until retirement. Like with a pension fund, you must contact your pillar 3a provider to designate your partner as a beneficiary to take advantage of any death benefits payable. This declaration is usually required during your lifetime.

It is advisable to establish a common financial basis, even beyond pillars 2 and 3. You should draw up a savings plan for purchasing long-term goods, for instance.

If one of the two partners in a cohabiting couple becomes unable to work, the invalidity insurance benefits go directly to the incapacitated person. It is best to take out invalidity insurance. Incapacity to work following an accident is comparatively well covered by accident insurance (UVG).

Cohabiting couples should discuss the solution they would envisage if one partner becomes incapacitated. An advance care directive is a good option, as it allows the partner to act as a representative if necessary. A living will is also recommended. This is a document in which each partner states their position on medical treatment issues and describes what they would like to happen if they become incapable of judgment.

Your wishes may change over time. You should therefore check these documents regularly and adapt them accordingly.

Initially, the mother of the child automatically has custody in a cohabiting couple. In order to include the father equally, he must acknowledge paternity at the registry office and sign a joint declaration of parental custody.

After the birth, unmarried parents usually conclude a maintenance agreement containing provisions on child support, custody and visiting rights. This document must be submitted to the child and adult protection authority (CAPA), which makes decisions in the best interests of the child. If unmarried parents are unable to agree on custody, childcare support contributions and other arrangements for their child after they split up, it is up to the CAPA to decide.

During a baby break, the partner looking after the child gives up work or reduces their working hours. Consequently, they pay lower OASI contributions. In contrast to married couples, each partner is responsible for avoiding their own financial gaps. This shortfall can be made up for with private savings.

As a cohabiting partner, you have no statutory entitlement to inheritance. However, you can write a will to designate your partner as the recipient of the freely disposable portion of your inheritance. The freely disposable portion depends on the amount that will be paid to your heirs, who are entitled to receive their compulsory portions at the very least. The compulsory portion corresponds to a fraction of the statutory inheritance. If the amount specified in the will falls below this threshold, the heirs concerned can take legal action to claim their share.
Aside from these compulsory portions, you can bequeath your assets entirely according to your wishes. A will or inheritance contract is required for your cohabiting partner to be a beneficiary. High inheritance taxes may be payable in some cantons.

If there is no will, the estate will be divided according to the statutory inheritance provisions. If there are no heirs, the inheritance usually goes to the state.

As well as signing a cohabitation agreement, it makes sense to draw up wills that specify that the parties mutually leave their assets to each other. Be sure to observe the formal requirements to ensure the validity of the will. A joint will is not permitted, for example. Each partner in a cohabiting couple must write their own will.

Additional security can be ensured by drawing up an inheritance contract in which any heirs whose compulsory portion of the inheritance is protected by law waive some or all of their claims in favor of the cohabiting partner. Again, the formal requirements must be observed. It is a good idea to check all these declarations regularly and to update them if necessary.