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Created on 26.04.2022

Divorce: how a marriage break-up affects retirement planning

Divorce marks an end and a new start at the same time. Looking ahead is about reshaping your own future. This also includes retirement provision. To avoid gaps in retirement, provision should be set up early on.

“Divorced” is a relatively common civil status in Switzerland. According to statistics, 40 percent of all marriages end in divorce. It is then that emotions usually run high. Having knowledge can help you keep a clear view in such difficult situations, at least in financial matters. This is important because the consequences can be serious.

Divorce involves decisions

Divorces can start a domino effect, leading to legal and financial consequences. There are joint decisions to be made, for example relating to custody of the children, maintenance payments and dividing up the marital property. Those who manage to settle can be divorced in three to four months. If not, a divorce can take several years and incur thousands of francs in court costs. If a divorcing couple’s resources are very tight, they can apply for free legal aid.

What happens in a divorce?

All married persons without a marriage contract live in a joint ownership of acquired property. The assets acquired by the married couple during the marriage are considered to be acquired property, and this belongs to both spouses. In the event of a divorce, the acquisitions are split up equally. This is called the 50/50 rule. NB: In the case of registered partners – unless otherwise agreed – the separation of property applies. They each have no claim to the other’s assets.

Divorce law: the most important provisions

  • Divorce is possible regardless of fault. This means that regardless of on whose initiative the divorce was sought, the economic consequences are settled in a balanced manner.
  • Divorce can be sought by joint request or by divorce suit. The latter requires a separation period of two years (The link will open in a new window divorce proceedings).
  • Money saved during the marriage in the state (OASI) and employee benefit (pension fund) schemes is divided equally, regardless of the reason for the divorce. This also applies if one spouse is already retired at that time.
  • In order for divorce courts to check that no retirement assets avoid the dividing up of assets, the following applies: the retirement planning and vested benefits institutions must notify the 2nd pillar central office of all holders of retirement assets. 

Divorce problem: pension gap

If you did not make provisions for yourself during your marriage, you may have gaps in your pension after the divorce. This means that the pensions from the state or employee benefits schemes will not be sufficient to maintain your usual standard of living after retirement. However, it is possible to prevent pension gaps in old age. Three tips on how to do this:

Tip 1: Ensure clarity

Find out what plan assets you are entitled to after the divorce. These are made up of funds from the OASI (1st pillar), the pension fund (2nd pillar) and the voluntary 3rd pillar. Pension income should be at least 60 percent of the last gross wage received.

Tip 2: Fill the contribution gaps in the mandatory pension scheme

In the OASI (1st pillar), gaps in contributions of the past five years can be paid in arrears. In the employee benefits scheme (2nd pillar), you can increase your pension by making voluntary contributions to the pension fund.

Tip 3: Strengthen your individual retirement planning

If you want to fill the gaps in your pension after divorce, you should bolster your own private retirement planning. Recommendation: pay into the retirement savings account 3a, invest money in retirement funds or take out a life insurance policy.

Women are at a higher risk when it comes to retirement planning

Women are at a higher risk when it comes to retirement planning. Figures from the Swiss Federal Statistical Office (SFSO) show that on average, women received about one third less old-age pension than men in 2020. In technical jargon, this is referred to as the “gender pension gap”. This means that one in four divorced woman pensioners is dependent on supplementary benefits paid into the OASI.

The SFSO explains the differences between women and men in terms of retirement planning by their respective employment histories. Women are more likely to both interrupt their employment and work part-time – in both cases mainly for family reasons. Because domestic and family-related work – which is most often done by women – is unpaid, it has no influence on the benefits from retirement provision.

What’s the best thing to do in such a situation?

Tip 1: Seek advice early on

Good financial planning can reveal pension gaps and help you to fill them.

Tip 2: Pay into your pension fund

People who work part-time are at a disadvantage because of the coordination deduction. This often affects women. A pension gap can be filled by paying into the 2nd pillar. 

Divorce: a look at the statistics

2010 is considered a record year for divorces in Switzerland. Around 22,100 couples’ marriages broke up in that year. According to federal  The link will open in a new window divorce statistics , two out of five marriages currently end in divorce. If one looks at the duration of marriage in divorce cases, another trend that emerges is that the longer someone has been married, the more likely it is that they will get divorced. Since 1984, the average age of people seeking divorce has increased by eight years: from 41 to 49 years for men and from 37 to 45 years for women.

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