Limitations to pillar 3a and 3b
Surviving spouses benefit first in pillar 3a. However, if you do not have a spouse when you die, your descendants and common-law partner inherit your estate in equal parts. However, for this to happen, the common-law partnership must have been in existence for at least five years, and the pension fund must have been informed by the pension fund member about the existence of the partner. The surviving common-law partner must share pillar 3a assets with any children. This can be problematic, for example if a mortgage on mutual residential property must be repaid with the 3a assets. In this case, the pension fund has to receive an alternative percentage distribution and the names of the beneficiaries in writing. A partner can be provided with additional security in an unrestricted 3b pension plan. In this case, you are free to nominate beneficiaries, but you must take inheritance law limitations into account.
No legal inheritance claims
Spouses have a legal inheritance claim. However, common-law partners get nothing in cases of inheritance. The free share of an inheritance at least can be allocated to your common-law partner under a will/inheritance contract.
Big taxation differences
Married couples are taxed jointly in contrast to common-law partners. Married couples with high incomes may be at a disadvantage because of the progressive tax bands. Spouses in all cantons are tax-exempt from inheritance and gift taxes. People living in common-law partnerships, however, are often taxed at the highest rate in many cantons.