In Switzerland, the trend of cohabitation is on the rise among couples with children. Many opt for unmarried cohabitation, which is becoming increasingly popular. The reason for this choice is that dual earners often pay higher taxes when married, and entitlement to a widow’s pension becomes invalid if they remarry. However, unmarried partners face gaps in their provision and other risks, especially in retirement planning.
One significant gap in provision is that unmarried partners do not receive widow’s pensions from AHV or pension fund equalization if there is a separation. Additionally, women who work part-time due to childcare often face lower pensions and limited career opportunities. The gender gap in pensions is significant, with women having around 30% lower pensions than men. Furthermore, having children can result in a loss of career and wealth potential, with parents potentially facing a million francs less in retirement savings.
Financial advisors recommend several options to address these disparities faced by unmarried couples cohabiting with children. One option is cohabitation agreements that protect individual rights and responsibilities within the relationship. Another option is paying into the third pillar of retirement plans to provide additional security for retirement savings. Working at higher rates can also help increase retirement savings for cohabiting couples without marriage benefits. Finally, financial advisors suggest considering marriage for added protection and benefits such as inheritance rights and tax advantages.
In conclusion, while many couples choose unmarried cohabitation for tax reasons or lack of commitment to marriage, it comes with significant risks and gaps in provision that must be addressed through careful planning and financial strategies.
