Let’s pick Lauren as an example. She is 35, married and is currently earning 100,000 CHF per year. She is pregnant and wants to understand how the 60% contract when she returns to work after maternity leave is going to impact her pension provision and associated benefits.

Current Situation:

She earns 100,000 CHF per year. The coordination deduction is currently 25,095 CHF (this reduction is to coordinate the first and second pillars) therefore the coordinated salary is:

• 100,000- 25,095 = 74,905 CHF

As she is 35, a minimum of 10% is paid into her second pillar therefore 7,490 CHF is being contributed on an annual basis.

60% Contract:

60,000 CHF earnings per year. Lets assume the coordination deduction hasn’t increased since she returned to work, therefore the coordinated salary is:

• 60,000 – 25,095 = 34,905 CHF

She is now 36 and still in the 10% category so 3,490 CHF is being contributed to her second pillar on an annual basis.

Impact:

Lauren’s Second Pillar Retirement Savings

Although Lauren has reduced her contract by 40%, her annual second pillar contributions have decreased by 53%.

Lauren’s Second Pillar Insurable Benefits:

Children’s disability pension, children’s orphans’ pension, Lauren’s disability pension and the survivor’s pension in place for her husband will all also decrease as these are based on the new coordinated salary.

What does this mean for her and her family?

Lauren will be the main carer for their child and if Lauren was to become sick or die the family would have less protection in place as this is calculated on the new lower figure under the new contract.

At a time when they need more protection in place, they will have less.

What can be done?

In Lauren’s case she started a third pillar with insurance to protect her family on her death. Now if she dies before retirement the family will receive a 200,000 CHF lump sum and she is using the savings provision to save for her own retirement in line with her attitude to risk.

Of course, if Lauren’s circumstances were different my recommendations could have also been different – but that’s the benefit of a financial review

That thought stuck with me for a while. We can throw any mysticism out of the equation and still ask ourselves, is there really a point in planning but not setting the date? An engagement might become a burden if we do not know when the wedding will take place as we need to plan an appropriate budget and book the venue, liaise with food caterers, organise travel arrangements. Even the flowers could become your enemies because a lot of them are seasonal, so forget delphiniums if it is a September wedding, however you are in luck if you move it to October. And whilst these details might seem like something a wedding planner should worry about, keep in mind that blue flowers are exquisite and are much more expensive when you try to get them out of season, so it is only the wedding planner’s concern until the moment that you must make a choice between what you desire and what it costs. This could surely be avoided if you set a date for your wedding and then plan everything based on that. It can still of course be a stressful time but at least you do not have to deal with the uncertainties that setting the date eliminates.

Deadlines are something that keep us focused and provide the sense of urgency that is a great source of productivity. They also provide you with both comfort and motivation. You end up following certain steps to reach your goal and you are also responsible as to how it gets done. Control over your own goals cannot be underestimated as a lot of abstract ideas become very much real. ‘Someday’ transforms to ‘Monday’ or ‘1st October’ or ‘August 2024’. There is something satisfying in the certainty, as a person is suddenly moving through time and not simply being carried by the flow.

When you have a goal, you should probably also think of a plan. If you have a plan, you should probably set a timeframe. Otherwise, how different are you from my fortune-telling friend? In the end, she did end up opening her boutique, but before that she spent a long time working to meet all her goals in time for the opening; I went to Turkey the year after as I realised that at the time I did not really have the funds to support my dream vacation; and our marathon-running classmate is currently thriving and living his best life. He will die of course, but hopefully at a ripe old age. After all, the timeframes that are not set by us can never be guaranteed.

As cohabitation is not recognised in law, you and your partner are to a large extent treated as individuals – and not as a married couple or as a couple in a registered partnership.

Cohabitation has no effect on the surname of either partner. Children from previous relationships keep would keep their original surnames. Children you have together take the mother’s surname. Joint custody of the children means they can be given their father’s name (the parents must submit a joint application to the civil register office).

Cohabiting has no effect on citizenship applications nor Old-age and survivor’s insurance and occupational pensions. The old-age and survivor’s insurance of each partner would be calculated separately. A partner who does not work can make minimal payments to retain their right to old-age and survivor’s insurance in Switzerland. If there is a dissolution of the relationship with your partner, you have no right to claim half of the contributions paid into pension funds and old-age insurance.

Property ownership in Switzerland can be complicated at the best of times. There are various types of property ownership: individual ownership, ownership of part of a multi-floor building and shared ownership. The financial participation of both parties is recorded in the land register. It is advisable bbefore you buy a property together; a written agreement should be signed. This agreement will confirm from the outset who will move out if you decide to terminate the relationship.

Taxes in Switzerland are to be completed individually when you and your partner live together as an unmarried couple. You each are required to complete your own tax return.

When the parents are unmarried, they must make a joint declaration in order to establish joint parental authority. The parents must declare that they:

• agree to share responsibility for the childd or children
• have agreed on residence for the child, on personal relations or each parent’s share of childcare duties and on child maintenance contributions.

When the parents are unmarried, they must make a joint declaration in order to establish joint parental authority. The parents must declare that they:

• agree to share responsibility for the childd or children
• have agreed on residence for the child, on personal relations or each parent’s share of childcare duties and on child maintenance contributions.

The declaration can be made at the civil register office at the time of recognition of the child, or later at the Child Protection Authority.The death of a partner is always tragic and during this time only made more difficult if things are stalled in probate.

• Inheritance: When your partner dies, you do not automatically inherit anything. There are limits on the provisions your partner can make for you in their will because Swiss inheritance law reserves certain proportions of an individual’s estate for close family members such as children and parents.
• Inheritance tax: If your deceased partner leaves you something in their will, you do not have access to the beneficial tax rates offered to close relations in most cantons.
• Widow/widower’s pension: Unmarried partners do not receive any widow/widower’s pension from the old-age and survivor’s insurance or accident insurance.
• Many pension schemes only offer a limited right to a survivor’s pension to unmarried partners.

The cohabitation agreement can be a preferred option as opposed to a Registered partnership. A registered partnership is only open to same-sex couples. Heterosexual couples who do not want to get married and same-sex couples who do not want to enter a registered partnership, but who still want to ensure legal rights for their partner can draw up a cohabitation agreement.

The cohabitation agreement is not regulated in law therefore it is advisable to draw up a written agreement. This does not need to be witnessed by a notary if it does not contain any provisions relating to inheritance.

Contents of the agreement can vary, below is a basic outline. The agreement should include the following points:

• What belongs to whom (make an inventory).
• Property purchases: Are you buying the property together as a joint purchase?
• Who gets to stay in the home you shared as a couple if you break up, and what is the notice period?
• How are you going to split the costs of running the household?
• How high are the monthly maintenance contributions that the higher earner will pay to the other person if you split up?
• How will you split your assets and how will you divide up contributions paid into old-age and survivor’s insurance and pensions schemes?
• Death: Are you going to take out a life insurance policy that will benefit the surviving partner if the other partner dies?
• Children: Decide

Living together as an unmarried couple does not automatically give the partner rights but given some prior planning and information can provide a level safety and comfort in these circumstances. It is always advised to consult with an expert.

Setting aside love and feelings (we are a financial advisory firm after all), our consultants usually get the same question from our clients, “I have heard I will pay more taxes if I get married, is it true?”.

There are 5 parts to that questions: Administration, 1st pillar, 2nd pillar, your global income tax rate & Inheritance tax. As expected, the answer is both yes and no, depending on how restrictive you are with your answer and the structure of your earnings. Let’s look at why.

1. Administration: Married = 1 point
   Being married simplifies a lot of the day to day life. Consider just filing your taxes. Married couples file one tax return, unmarried couples have to file separate returns. This advantage, in case of divorce can also become a real Pandora’s box.
2. 1st Pillar: Unmarried couples = 1 point
   A full annuity for a couple after 43/44 years of contribution will never exceed 150% of a standard annuity for one person. Therefore, there is certainly a disadvantage for married couples in this regard.
3. 2nd Pillar: Married = 1 point
   Many pension foundations require at least 5 years of proven common living to offer the same benefits unmarried couples have than married ones. Often, too many foundations offer no benefits at all to unmarried couples, resulting in a significant loss should the worst happen to one of the members of the couple.
4. Global Income tax rate: We have a tie
   Depending on your canton of residence, the splitting of your income (50-50 or 70-30) and your total common revenue, you might pay more taxes should you get married. In general, the more you earn, the less beneficial it is to be married. For a combined income above CHF300’000, it is often better to not be married.
5. Inheritance Tax: Married = 1 point
   Forced heirship exist in Switzerland, it is therefore more difficult to protect a partner than a wife. Also, whilst there is virtually no taxes between spouses (up to 6% in Geneva above CHF500’000), taxes amount to 26% above CHF100’000 for partners.

All in all, if you are ready to pop the question, don’t let taxes prevent you from doing so as it is not a good enough excuse!