Pension Provision for Cohabiting Couples

Providing financial protection for a cohabiting partner: Special rules apply in the case of cohabitation.

Financial security for disability or death is particularly important in the case of cohabitation because the law does not provide a safety net for your partner. Read here how you can protect your cohabiting partner and what benefits are available to cohabiting partners under the AHV and pension fund

More flexibility also means less financial security

Living together as an unmarried couple: More and more couples are choosing a domestic partnership without marriage. Alongside potential tax benefits, most cohabiting couples see the lack of legal obligations as an advantage. A domestic partnership can be canceled at any time. This means more flexibility in general, but fewer financial benefits in an emergency. That is why it's so important to provide financial security for your cohabiting partner in addition to the state and occupational pension plans.

Which social insurance applies, and when?

Different insurance carriers are responsible, depending on whether it is a case of disability due to accident or illness, or death. 

Accidents and occupational illness If you have an accident or job-related illness, the AHV (Federal Old Age and Survivors' Insurance) and accident insurance will pay benefits. You will receive a daily benefit from the accident insurance if you have a short-term disability. For long-term disability, the accident insurance and AHV will pay you a disability pension. In the event of your death, any children will receive a survivor's pension.
Illness If you are unable to work temporarily due to illness, your employer must continue to pay your salary for a certain amount of time. If you are disabled for a longer period of time, the AHV and pension fund will pay benefits. In the event of your death, any children will receive a survivors' pension. Depending on the pension fund regulations, cohabiting partners may qualify for assistance.

Accident insurance

Employees are covered by the mandatory accident insurance. The employer pays the insurance premiums for occupational accident and illness, while the premium for non-occupational accidents is deducted from your wages. Self-employed persons can obtain insurance coverage themselves.

Starting on the third day after the accident, the insured person will receive a daily benefit of 80 percent of their salary. If they will not be able to return to work, together with the first pillar they will receive a pension for 90 percent of the pensionable salary. These benefits will apply up to a salary of CHF 148,200. In the event of the death of the insured person as a result of an accident, their cohabiting partner would not receive a survivors' pension. Children who have lost both parents will receive 25 percent of the pensionable salary, while children who have lost one parent will receive 15 percent.

Continuing salary payments during illness

Employers are obligated to pay 100 percent of their employees' salary for a certain amount of time in the event of illness. According to the Swiss Code of Obligations, the minimum period is three weeks in the first year of company service. After that, the time period depends on what is called the Bern, Basel, and Zurich scale. Many employers purchase daily benefits insurance in order to pay their employees 80 percent of their salary in the event of longer absences. At least half of the premium must be paid by the employer and the rest by the employee. See your employment regulations for specific details.

First pillar: AHV/IV benefits

A disability pension is paid out for long-term health problems

If you suffer from long-term physical, psychological, or mental disability problems due to an illness or accident and cannot perform your regular duties, you will receive a disability pension. Disability pensions are paid out when you cannot be gainfully employed in the overall job market anymore.

The payments are calculated based on the insurance term and income. The degree of disability also determines the pension amount. For disability of 40 percent or more, the pension is one-fourth and for 70 percent or more disability, the insured receives a full pension.

Cohabiting partners do not receive a survivor's pension

In the event of your death, your partner is not entitled to benefits from the first pillar. If you have children, they will receive an orphan's pension until the age of 18 or until 25 if they are in school.

Second pillar: Benefits from the pension fund

Pension funds also pay disability pensions

If you are unable to work due to illness and receive a disability pension from the first pillar, you will also receive a disability pension from the pension fund. The amount depends on your pension fund's pension plan. For details, see your pension statement. Benefits will also be paid to children: They receive a disabled person's child's pension. This is 20 percent of the disability pension.

Survivors' benefits not guaranteed for cohabiting partners

In general, the Federal Act on Employee Benefits Insurance does not provide for death benefits for cohabiting partners. However, pension funds can include survivors' benefits in their regulations in the form of a partner's pension or lump-sum payment.

Check your pension fund regulations to see if your cohabiting partner is eligible for benefits and what the conditions are. Usually, the domestic partnership must be on file with the pension fund and you must have lived together for at least five years. Your children will receive an orphan's pension in all cases. The pension fund benefits apply in the event of death due to illness.

Third pillar: Private pension provision benefits

Cohabiting partners must be appointed as a beneficiary

The private pension is not only very suitable for retirement but also for setting aside capital for the worst-case scenario. In the event of your death, your children are first in the order of beneficiaries. However, you must notify the pension fund in writing that you wish to appoint your cohabiting partner as a beneficiary.

Other types of insurance

Third-pillar coverage can be obtained from an insurance company if you wish to provide additional financial security for your cohabiting partner and children. You can combine retirement savings with a disability and/or life insurance policy. But beware: A portion of your payment will be used to finance insurance coverage, and will not be available upon retirement. As an alternative, you can set up a retirement savings plan with a bank and conclude a separate risk policy with an insurance company.

Disability insurance closes the income gap in an emergency

If you become disabled as a result of accident or illness, disability insurance will ensure that you, your partner, and your children can maintain your usual standard of living. The disability pension closes the income gap between the federal and employee benefits insurance (second pillar) disability benefits and the actual costs of living.

Term life insurance is recommended for cohabiting couples

In the event of your death, the beneficiaries you select will receive a pre-determined lump sum or pension immediately. Because you are free to choose your beneficiaries for Pillar 3b, term life insurance is very well suited for cohabiting couples. This balances out the lack of survivors' benefits from the first and second pillars.

Do you have any questions about financial security?

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