Comparison of marriage and cohabitation

Marriage vs. cohabitation. What difference does it make to pension provision?

Marriage vs. cohabitation? Legal differences abound when it comes to the issue of pension benefits. In Switzerland, marriage offers clear advantages in terms of statutory pension and inheritance entitlements – benefits not afforded to couples who don't have the protection of a marriage certificate. Cohabitation, on the other hand, provides greater flexibility. These differences between marriage and cohabitation continue to exist.

Cohabiting couples at a legal disadvantage in Switzerland

Unlike marriage, there is still no legal basis for cohabitation as a standard form of domestic partnership. As a result, cohabiting couples are less well protected in the event of separation or death, and with regard to retirement provision. When it comes to financial security, people who live together are at a disadvantage compared with those who are married.

1st pillar: State retirement provision (AHV)

Married: AHV pays a surviving spouse's pension

The level of employment and salary of both spouses are key to determining whether being married is worthwhile when it comes to AHV. With the AHV retirement pension, a married couple benefit from each other's contributions if one of them works significantly more or has a higher salary. Thanks to contribution splitting, the partner earning less receives a higher pension. Nevertheless, married couples only receive a maximum of 1.5 times the maximum single person's pension.

If one of them dies, the widow or widower receives a surviving spouse's pension. Even divorced spouses are entitled to an AHV pension subject to certain conditions. The general rule is as follows:

  • Women receive a surviving spouse's pension if they have at least one child at the time of becoming widowed, or are over 45 years old and were married for at least five years.
  • Men receive a surviving spouse's pension provided they have children under 18.

Cohabiting: AHV only pays an orphan's pension

Each cohabiting partner is treated as a single person in legal terms. Therefore, both partners receive their full AHV retirement pension in old age but cannot benefit from the other person's contributions.

Upon the death of the partner, there is no entitlement to benefits from the state pension scheme. In the event of death, any children up to the age of 18, or 25 if in education/training, will receive an orphan's pension.

Differences between marriage and cohabitation – 1st pillar

1st pillar Marriage Cohabitation
Retirement Joint AHV retirement pension (up to 150% of maximum single person's pension) Individual AHV retirement pension each
Death Surviving spouse's pension/orphan's pension Orphan's pension

2nd pillar: Employee benefits insurance

Married: Pension funds pay survivors' pensions to the surviving spouse

In the event of death, the 2nd pillar guarantees payment of a survivor's pension provided

  • the survivor has a duty of maintenance for children
  • they are older than 45 and the marriage lasted at least five years.

The pension fund rules may adjust these criteria in favor of the surviving dependents. Even divorced spouses are entitled to a pension from the pension fund under certain circumstances. In the event of a divorce, the retirement assets accrued during the marriage are split.

Cohabiting: Pension funds can voluntarily pay survivors' benefits

In the event of death, the pension foundation may pay benefits in the form of a partner's pension or a lump-sum payment to the cohabiting partner. However, it is not required to do so. The decisive factor is whether the pension fund's regulations provide for voluntary survivors' benefits for partners. If so, the following basic condition applies:

  • An uninterrupted domestic partnership must have existed for at least five years leading right up to death.

This rule also applies if there are any children from the relationship whose living expenses the survivor is required to pay. In the event of separation, accrued assets are not shared.

Differences between marriage and cohabitation – 2nd pillar

2nd pillar Marriage Cohabitation
Retirement Individual pension payment according to pension fund regulations Individual pension payment according to pension fund regulations
Death Survivor's pension according to pension fund / child's pension Voluntary partner's pension according to pension fund / child's pension

Marriage vs. cohabitation: Differences in treatment of vested benefit accounts

Where a person is no longer a member of any pension fund on a temporary or permanent basis, the money they have saved can be managed in a vested benefits account.

If a married person with a vested benefits account dies, the money mainly goes to their spouse. Orphans, foster children, and in some cases divorced spouses can also be beneficiaries. Cohabiting partners, on the other hand, can benefit only to a limited extent.

3rd pillar: Private pension provision

Married: Spouses have rights under Pillar 3a

In the event of divorce, the spouse can insist on a division of the Pillar 3a assets provided the couple had not agreed a separation of property and the money does not consist of pre-marriage savings or inheritances.

In the event of death, the spouse has priority in the case of money from tied pension provision. This is followed by the remaining legal beneficiaries.

Cohabiting: The beneficiary in the case of Pillar 3a depends on the circumstances

In the event of separation, the holder keeps all the money. In the event of death, the situation varies depending on the family situation:

If the partner is still married, the survivor together with the children of the deceased is in second place in the order of beneficiaries.

If neither party is married and there are no children of their own, the cohabiting partner can be the full beneficiary.

If there are children, the partner will only be considered if one of the following conditions is met:

  • The deceased supported the surviving person to a significant degree during their lifetime.
  • The surviving dependent is responsible for the maintenance of one or more children from their relationship.
  • The domestic partnership had already been in existence on an uninterrupted basis for at least five years at the time of death.

If any of these points applies, the order of beneficiaries must be amended. The pension fund must be informed of this in writing.

Married and cohabiting: Pillar 3b offers more flexibility for cohabiting couples

With Pillar 3b, beyond the statutory compulsory portions there is a free choice of beneficiaries. For this reason, flexible pension provision is particularly suitable for cohabiting couples.

Differences between marriage and cohabitation – 3rd pillar

3rd pillar Marriage Cohabitation
  • 3a: account holder is favored
  • 3b: free choice of beneficiary
  • 3a: account holder is favored
  • 3b: free choice of beneficiary
  • 3a: spouse is first in order of beneficiaries
  • 3b: free choice of beneficiary (after taking account of statutory compulsory portions) 
  • 3a: cohabiting partner is second in order of beneficiaries under certain circumstances
  • 3b: free choice of beneficiary (after taking account of statutory compulsory portions)

Marriage vs. cohabitation: Differences in estate planning

For married persons, the marital property regime is the primary determining factor. If there is no marriage contract, acquired property is shared. In that case the spouse receives at least their own property, plus half the jointly acquired property, and the estate awarded to them.

Surviving cohabiting partners, on the other hand, are deemed "no relation" and are therefore not considered legal heirs. If they are to be beneficiaries, this must be set out in a last will or inheritance contract, but if there are heirs entitled to a compulsory portion, it may not be possible to abide fully by the deceased's wishes. With a last will, however, disputes with the legal heirs can be avoided.