Divorce: how does it affect your pension fund?
As a spouse, you are entitled to half of the funds paid into the pension fund during the marriage until divorce proceedings begin.

Divorce is an emotional process with many areas to be addressed. The division of jointly acquired assets has the potential to give rise to conflicts and confusion. The allocation of occupational pension fund assets can also be a complex affair.

The topic of divorce is especially relevant for women: In Switzerland far more women work part-time than men. In Switzerland, one in four women does not have a pension fund, putting them in a worse position in terms of retirement provision. Three out of four women describe elderly care as a very important long-term financial issue. Read what this figure means in “For 75% of women, elderly care is key”.

Read on to find out how pension fund assets are allocated to each spouse in the event of a divorce:

How does a divorce affect pension fund assets?

In principle, both spouses are entitled to half of the funds paid in during the marriage until divorce proceedings begin. This applies regardless of whether one spouse’s contributions are lower than the other’s or one spouse is temporarily working part-time (or not at all) to care of the couple’s children. It also applies if either person has not paid into their own pension fund for a while, due to illness.

Both spouses’ total pension fund assets are taken into account when calculating the pension compensation within pillar 2. This calculation also includes advance withdrawals made to purchase a self-occupied residential property, as well as voluntary purchases made into the pension fund.

Once the pension compensation within pillar 2 has been determined and specified in the divorce agreement, the sum is transferred tax-neutrally from the pension fund of the spouse liable to pay to the other spouse following the divorce. If the spouse entitled to compensation does not have a pension fund when the pension compensation is paid, the latter will be transferred to an existing or newly opened vested benefits account. Find out more here “Vested benefits account – Securely deposit your pension fund assets”.

Assets were withdrawn from the pension fund to buy a property. What happens to them?

Any amounts withdrawn to finance a self-occupied home are taken into account when calculating the sum to be halved. In terms of calculating the pension compensation, it is important to establish whether one spouse will take over the property after the divorce. You can find more information about home ownership and divorce in the article “Separation or divorce – and your home?”.

There is a marital agreement with separation of estates. What does this mean for the allocation of pension fund assets?

Property law stipulates that any agreements made between spouses do not affect the distribution of pension fund assets. The entitlement to pension compensation within pillar 2 remains unchanged and continues to apply.

How can I best prepare for retirement?

Divorce can give rise to pension gaps, which in turn result in lower retirement benefits. Depending on the situation, women may see their future retirement benefits impacted by longer life expectancy and smaller contributions to pillar 2 due to lower average wages, as well as a greater tendency to work part-time.

In order to maintain their desired standard of living in old age, women in particular must begin planning their retirement early. Here, it is important to consider the three pillars of retirement provision: the AHV, the occupational pension fund and private retirement savings. Read about this in our article “Planning your retirement as a woman”. If you have any questions, feel free to reach out to one of our experts. They’ll be happy to help.

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