Retirement planning Cohabitation and security?

Cohabitation is a solution for many young couples in Switzerland. But that doesn’t automatically mean security.

by Nils Aggett 15 Feb 2019

Bild: iStock

Dear Mr. Aggett

My boyfriend and I are moving in together. We are both 30 and very committed to our careers. I’m slightly worried about our finances, especially as we want children later. How can we make secure financial arrangements for each other without having to get married?

Laura G., St. Gallen

Nils Aggett

Nils Aggett is Head of Pension Services at UBS.

He also represents the interests of pillar 3a- and vested benefits foundations and their clients in the Swiss Pension Association (VVS) as Chairman of the Board.

Dear Madam G,

To move in with someone requires mutual respect. Even the odd messy behavior can lead to arguments. And this is especially true when it comes to money. Those who prefer cohabiting to getting married should clear up this issue when their love is still young. In Switzerland, unmarried couples are not on equal footing with married couples.

Cohabitation contract

The best way to arrange important financial matters is through a cohabitation contract. This gives you the option of making individual agreements and of clarifying future issues. For example, it can specify how much you each contribute to living costs and what will happen to property acquired together, or for that matter the apartment, if contrary to all expectations you should break up. It’s vital to stipulate the responsibilities and costs paid by each of you if there are children involved.

Home ownership and retirement

Lay down the financial foundation for your own home. Our factsheet illustrates your options.

Will and inheritance contract

As an unmarried partner you have no legal rights to inheritance. So in addition to the cohabitation agreement, it makes sense to draw up wills naming each other as a beneficiary. The wills must be hand-written by the respective individual, dated and signed. Unlike in Germany, for instance, joint wills are not permitted in Switzerland. An inheritance contract under which the heirs to portions protected by law renounce all or part of their entitlements in favor of the partner can provide additional security. The contract of inheritance must be publicly notarized by a notary and signed before two witnesses.

AHV and pension fund

Think about your financial security in the event that something should happen to one of you. The AHV does not pay widow’s or widower’s pensions to unmarried partners. However, most pension funds will pay a survivor’s pension if the couple had children together. If there are no children, the partners must have lived together for at least five years, or the surviving partner must have been financially dependent on the deceased. Clarify with your pension fund what conditions must be met to claim a pension. Often, written confirmation of the partnership is necessary.

Savings plan and retirement savings

Lastly, it’s important to create a common financial basis. Draw up a savings plan so you can afford to make major purchases. Voluntary retirement savings are also important, such as paying into a pillar 3a plan (UBS Fisca account / UBS Fisca custody account). These enjoy tax advantages and provide you, your partner and children, with long-term security. However, pillar 3a savings are blocked until retirement. If your wish for children is fulfilled, it’s worth thinking about an affordable life insurance policy.