Cohabitation in a concubinage? Advantages and disadvantages from the point of view of social security

If couples decide to live together in a cohabitation, they do not enjoy the same social or legal protection as married couples or couples in a registered partnership. If they have children and one partner reduces the workload in order to devote more time to bringing up their children, it is advisable to make financial security arrangements during their lifetime and to clarify questions about the entitlement to personal care.

In our blog post "Protective provisions and living will - basis for your self-determination", we have shown that it is advisable, especially in personal care, to answer the important questions of life early on. This will clarify who is legally capable of enforcing personal will when you can no longer do it yourself.

This raises the question of how to ensure the family's livelihood in the event of death. What benefits does the social security safety net offer as financial security for the surviving spouse or registered partner? In this case, the beneficiaries are regulated in accordance with the applicable social security legislation. But what is the situation for partnerships without marriage certificate, i.e. concubine couples?

• Does the law offer sufficient or any security for partnerships in concubinage?
• What is the situation when they have children together
• What do I have to do to ensure that my family or my partner can benefit from insurance payments in such cases, or that he or she has sufficient financial security?

The following comments deal with the various statutory social security benefits, in particular those payable in the event of death, which arise for married couples and especially cohabiting couples, and point out potential gaps.

Old age and survivors' insurance, AHV

Spouses and registered partnerships

Entitlement to a widow's and widower's pension is governed by  Article 23 AHVG .   Article 25 AHVG  regulates the entitlement to orphan's pensions. In AHV, the registered partner is treated as a widower. The surviving partner will therefore only receive a pension if there are children at the time of widowhood. The entitlement to a widower's pension ceases as soon as the widower's last child reaches the age of 18,  Art. 24 para. 2 AHVG . In contrast, the widow receives a life-long widow's pension, subject to remarriage and the special provision of  Article 24 AHVG .

Do cohabiting couples also receive AHV survivors' pensions?

The old-age and survivors' insurance does not yet provide for pension payments for surviving cohabiting partners. If there are joint children in the cohabitation, they can benefit from orphan's pensions in accordance with  Art. 37 AHVG . The pension for married couples and registered partnerships is capped at one and a half times the maximum pension, currently CHF 3,555. By contrast, cohabiting couples [NR1] receive two single pensions, based on individual income, of currently a maximum of CHF 2,370. This means that cohabiting partners are given an advantage over married couples.

What do we recommend?

• Check the conclusion of supplementary insurance policies such as life insurance or death insurance
• Check whether it is still possible for both parents to continue working despite having children, if necessary, with a reduced workload

Occupational pension plan BVG (pension fund)

Where will my saved vested benefit credit go in the event of my death?

Married couples and registered partnerships

In the Obligatory Occupational Pension Plan (BVG),  Art. 19 BVG  regulates the claims of the surviving spouse, which also apply to the surviving registered partner pursuant to  Art. 19a BVG .

What financial security do cohabiting couples enjoy?

Is there a statutory obligation to provide benefits for cohabiting couples?  Art. 20a BVG  regulates the order of beneficiaries in the extended circle in relation to the spouse or registered partner. While legally predefined benefits are thus provided for married couples or registered partnerships, the beneficiary for the cohabiting partner must be approached proactively.

What do we recommend?

• Check the pension fund regulations of your current employer
  • What are the possible benefits to the cohabiting partner?
  • Which requirements must be met?
     
• Determine the beneficiary
  • Sign declaration of beneficiaries and report to the pension fund
  • This must be done again each time the employer changes
  • The pension fund must also be informed of any changes in the partnership and thus any change of beneficiary(ies)
     
• Examine the option of a capital withdrawal
  • The cohabiting partner may not be entitled to a pension in the event of death. The provisions for this are again found in the pension fund regulations
     
• Comprehensive financial planning before retirement age (ideally before age 55, as otherwise there is hardly any time left to build up necessary savings)

Industrial and non-occupational accident insurance

Married couples and registered partnerships

In the event of death, the surviving spouse or registered partner receives a pension or severance payment pursuant to  Art. 28 UVG  and  Art. 29 UVG . Half orphans also receive a pension, which is defined in  UVG Art. 30 .

What financial security do cohabiting couples have?

The law does not provide for a pension to be paid to the surviving cohabiting partner, even if there are joint children. However, the children of the cohabiting partner are also entitled to an orphan's pension in accordance with  UVG Art. 30 .

What do we recommend?

• Check the conclusion of supplementary insurance policies / life insurance

Conclusion

In summary, it can be said that in the case of cohabiting couples, it must be clarified how livelihoods can be guaranteed in the event of the death of the partner. This is to be done taking into account the probable employment situation of both partners. If both cohabiting partners were fully employed, financial problems will only arise in very few cases, as both partners are individually subject to the AHV (Old Age and Survivors' Insurance) and accident insurance and are financially independent.

If there is a possibility of favouring the partner as in the case of occupational benefits and if there is an intention to do so, this should be done in good time. It is advisable to comprehensively regulate individual wishes with corresponding congruence between the pension mandate, the cohabitation contract and the will. The contracts are valid in handwriting. However, depending on the complexity, we recommend the involvement of a notary for legal advice and notarisation. If children are present and the surviving partner works only part-time, additional financial precautions such as taking out life insurance or death insurance are recommended.

Would you like advice on the topics listed above regarding insurance coverage, tax aspects or legal questions? Our multidisciplinary teams from the areas of fiduciary, legal and tax services are happy to assist you.