Marriage in Switzerland: Financial Pros and Cons

Whether you are a married couple moving to Switzerland, or a pair of residents thinking of tying the knot, it is important that you understand exactly how marriage affects your financial life. From responsibility for shared debt to old-age pensions and insurance, marriage and money are intertwined in countless ways. Here, moneyland.ch lists the most important financial considerations for married couples and those considering marriage.

1. Social security

Marriage affects almost every aspect of social security, and thus impacts your financial independence. Here are the main pros and cons:

• Pros:

Being married or in a registered partnership entitles you to receive a lifelong widow’s pension (as a woman) based on your spouse’s social security contributions if they pass away. As a man, you may receive a widower’s pension based on your spouse’s social security contributions for as long as you are raising children from the marriage aged 18 or younger.

Marriage is also beneficial if only one of you earns an income in Switzerland, as long as the employed spouse’s annual social security pension contributions double the minimum annual contribution. In that case, you do not have to pay the minimum annual social security contribution separately for the unemployed spouse on top.

• Cons:

As two individuals living together without getting married (or registering your partnership), you are entitled to receive two “full” Swiss social security pensions. As long as you both contribute to social security throughout your working life, you each receive at least the minimum full state pension. If you both earn a decent income, you may each receive the “maximum” full pension.

That all changes when you get married. As a married couple, your combined pensions are limited to 150% of a single maximum pension. If you both earn well throughout your working life, you will still receive just one-and-a-half maximum pensions instead of two full pensions. In other words, getting married can cut your old-age pensions by up to 25 percent, compared to living together as an unmarried couple.

During the time you are married, your OASI contributions are split between you and your spouse. If you earn a lot more than your spouse, this can greatly reduce your OASI pension.

2. Taxes

Switzerland uses a progressive income tax system so the higher your income is, the higher the applicable tax rates will be. As a married couple, both of your incomes are combined to determine which tax bracket you are placed in. This arrangement can be either beneficial or costly, depending on your incomes. Note that the pros and cons listed here primarily apply to couples without children.

• Pros:

If only one of you earns an income, or if one of you earns a much lower income than the other, then marriage can be advantageous. Because your income tax bracket is determined by both of your incomes, marrying a person who has little or no income can drastically lower your tax bracket. In this case, their low income balances your higher income so you pay less tax.

• Cons:

If both of you earn good incomes, then the combination principle works against you because both of your incomes will be combined to determine which tax bracket you fall into. This “marriage penalty” is partially compensated by the special tax bracket schedule for couples, and by certain Swiss tax deductions. But if you both earn a similar income, getting married can directly translate into higher taxes.

3. Inheritances

Switzerland has strict rules dictating who gets what when somebody passes away. Your spouse is always first in line, followed by your children, as you can see in this guide to Swiss inheritance rules. These rules can work to your advantage or disadvantage, depending on your situation.

• Pros:

You have the security of knowing that your spouse will receive a large part of your assets if you pass away. Another major benefit is that, in Switzerland, you pay no taxes on inheritances or gifts from your spouse.

• Cons:

You have less flexibility in choosing who should get your money and property because your spouse is entitled to a compulsory inheritance share. Even if you write a will, you are still required to leave a large share of your estate to your spouse.

4. Pension funds

It is important to understand Swiss laws governing occupational pension funds (pillar 2), and how marriage affects your pension fund. Note: A pension fund may voluntarily offer more than what is legally required (such as higher pensions or pensions for unmarried partners).

• Pros:

Your spouse or registered partner receives a survivor’s pension from your occupational pension fund after you die. To be entitled to this pension, you and your spouse will have to have been married for at least 5 years and the surviving spouse must be at least 45 years old, or the surviving spouse must have dependent children to raise. The pension which your spouse receives from your pension fund if you die is equal to 60 percent of the old-age pension which you would receive when you retire. Note: A pension fund may voluntarily offer more than what is legally required, such as higher pensions or pensions for unmarried partners.

• Cons:

If, in the worst case scenario, you end up divorcing, the pension benefits accumulated during the marriage will be divided equally between you and your spouse. Depending on how much your spouse has contributed to their pension fund, the effects of this splitting may range from negligible (if your spouse’s savings are similar to yours) to devastating (if your spouse has little or no pension fund savings). As an unmarried couple, your pension fund savings remain in your possession if you break up.

5. Debts

As a general rule, both individuals in a marriage are responsible to repay debts which you take on as a couple. This includes most debt used to finance shared property. Business debts and certain other debts may be considered separate estates, but not in every case.

• Pros:

There are no real advantages to bringing debt into a marriage.

• Cons:

Aside from the financial stress which often accompanies debt, by getting married when you have debts you risk placing part of the burden of your debts on your significant other. Although you can choose to keep your estates separate by way of a marital agreement, your spouse may still ultimately be held responsible to help repay your debts as part of their marital mutual support obligation. The same holds true for personal bankruptcies. It may be preferable to get out of debt before you marry. You can find tips on how to get out of debt fast here.

6. Accident insurance

People employed in Switzerland get occupational accident insurance through their employer. If you work for your employer more than eight hours per week, then you are insured against accidents outside of the workplace as well.

• Pros:

If you or your spouse die in an accident, the surviving spouse may be entitled to a widow’s or widower’s pension from the other’s employer-based accident insurance. Women can claim a lifelong pension if they either have one or more children of any age, or are 45 years old at the time of their spouse’s death. Men receive a pension if they have underaged children at the time of becoming widowed.

• Cons:

Getting married does not have any adverse effects on your accident insurance.

Verdict

There are many different reasons why individuals get married, and money often does not play a major role in the decision. However, understanding how getting married affects your finances is an important step in deciding whether marriage is right for you.

More on this topic:
Having a baby in Switzerland: Your financial questions answered
Child benefits in Switzerland explained
Financial tips for families with kids in Switzerland
Financial inequalities between women and men in Switzerland
A financial guide to divorce in Switzerland
Inheritances in Switzerland: A guide to who gets what
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