How marriage and cohabitation differ in terms of retirement provision

Cohabitation
A cohabitation refers to a situation in which a couple lives together without being married. It offers a lot of flexibility and independence, but it also means that couples have to handle more things on their own. 

Marriage
A marriage is defined as the legal union of two people via a civil ceremony. Marriage automatically gives rise to certain rights and obligations, such as those related to mutual support, property, inheritance and financial planning.

Whether marriage or cohabitation: One's chosen lifestyle has a direct impact on retirement provision, inheritance law and financial security. The differences become particularly clear in the event of a separation, incapacity or death. Unmarried couples must therefore handle certain matters on their own that marriage would otherwise regulate by law.

People living in a common-law relationship are not protected in the same way as married couples in all areas of retirement provision and financial security: 

• OASI: If a person dies, the surviving spouse is not entitled to a widow's or widower's pension.
• Pension fund: Benefits depend on the rules of the respective pension fund and, in some cases, must be applied for or reported in advance.
• Inheritance law: Cohabiting partners do not automatically inherit. In the absence of a will or an inheritance agreement, the estate passes to the statutory heirs.
• Separation: Pension fund balances and assets are not automatically divided. People who work fewer hours because of children or household responsibilities therefore face an additional financial risk.
• Homeownership: Without clear provisions, the surviving spouse may have to pay out the heirs or may no longer be able to cover the mortgage on their own.
• Disability: If there is a prolonged loss of income, there is no legal obligation to provide support in a common-law relationship, as there is in marriage.

Retirement planning isn't just about OASI, pension funds and private insurance. Depending on your living situation, it may also be a good idea to set out important legal matters in writing. This is especially true in cohabiting relationships, because many rights do not arise automatically. However, married couples can also use a will, a power of attorney for healthcare or a living will to specify in greater detail what should apply in certain situations.

• Cohabitation agreement: Addresses issues related to living together and financial matters, such as living expenses, property, homeownership, debt or agreements regarding a separation.
• Will or inheritance agreement: Determines how the estate will be distributed. This is particularly important for unmarried couples, because the partner does not automatically inherit.
• Advance care directive: Determines who will take charge of a person's personal, financial and legal affairs if that person becomes incapacitated.
• Advance health care directive: Specifies which medical treatments are desired or refused and who should represent the individual's interests in dealings with doctors.
• Declarations of beneficiary status: Identify who is covered by the pension fund as well as under pillars 3a and 3b – to the extent permitted by law and the regulations.

Many gaps in cohabitation can be closed, at least in part, with the right precautions. It is crucial to review benefits and entitlements and to address important financial and legal issues early on.

There is no OASI survivor's pension for cohabiting partners. With regard to the pension fund, coverage depends on the specific regulations. Therefore, check with both pension funds to see what benefits are available and whether your spouse must be registered in writing.

When it comes to private retirement provision, it’s also worth taking a look at the beneficiary provisions. pillar 3a is subject to legal requirements, while pillar 3b offers more flexibility.

Cohabiting partners do not automatically inherit. With a will or an inheritance agreement, you can determine how your partner will be provided for within the limits of the law.

Particularly when it comes to homeownership, it should also be clarified whether the surviving person can assume the mortgage and pay out any heirs.

People who work fewer hours to care for children or manage household duties often accumulate less income and pension plan savings. In a cohabitation, there is no automatic division of pension fund assets in the event of a separation.

With a cohabitation agreement, couples can, for example, set forth how expenses, assets, homeownership or financial compensation will be handled.

If you lose income for an extended period due to illness or an accident, your household budget can quickly come under strain. Find out what benefits you can expect from disability insurance (IV) and your pension fund and how large any remaining income gap would be.

How much money will you actually have available in retirement, in the event of long-term disability or in the event of a death? A retirement provision analysis shows what benefits you can expect, how much you'll need financially and where gaps may arise. Together, we'll determine where additional protection makes sense and which solutions are right for you.