Legal framework for the second pillar in Switzerland
Introduction to the three-pillar system
Switzerland’s pension system is based on three distinct pillars, each playing a crucial role in the social protection of its citizens.
The first pillar is the state pension scheme, financed by compulsory contributions and designed to guarantee a basic income for retirees.
The second pillar, also compulsory, is the occupational pension scheme, which supplements the benefits of the first pillar and aims to maintain the standard of living prior to retirement.
Finally, the third pillar, which is voluntary in nature, allows individuals to build up personal savings to supplement their retirement provision.
The combination of the three pillars provides comprehensive social protection and guarantees Swiss citizens a degree of financial security throughout their lives.
Each pillar responds to specific needs and helps to ensure adequate coverage at different stages of life.
Regulations governing occupational benefits
The second pillar, or occupational pension provision, is governed by federal laws such as the Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG) and the Federal Law on Vesting in Pension Plans (FZG).
These laws lay down the rules governing the establishment, management and liquidation of occupational benefit schemes, as well as the rights and obligations of insured persons.
In addition, a number of provisions in the Swiss Civil Code govern aspects relating to the division of BVG assets in the event of divorce.
These regulations guarantee the security and transparency of the system, thereby ensuring that the interests of policyholders are protected.
They also establish the general principles governing the management of assets in the event of divorce, and indicate the extent to which the parties may or may not deviate from the legal system in this respect.
Second-pillar contribution system
The second pillar is financed by contributions from employers and employees.
Each month, a portion of the employee’s gross salary is deducted and paid to the pension fund, plus a contribution from the employer.
These contributions are invested in various financial vehicles to generate returns that are used to fund retirement, disability and survivors’ benefits.
This system accumulates capital that is returned to policyholders in the form of an annuity or lump-sum payment when they retire.
The division of contributions between employers and employees guarantees a balanced participation in the financing of occupational benefits, while ensuring the financial solidity of the system.
The returns generated by investments contribute to the growth of pension assets and the sustainability of benefits paid out.
Obviously, the amounts may differ depending on whether the contributor is self-employed or employed, or whether he or she has made regular contributions or not.
Divorce division overview
In the event of divorce, the division of pension assets is an important issue.
The divorce court supervises this procedure, ensuring that resources are distributed fairly between the spouses.
Pension funds must provide the necessary information on assets accumulated during the marriage, and the court may request further clarification if necessary.
Assets are divided according to the specific circumstances of each case, taking into account factors such as the length of the marriage, the respective contributions of the spouses and their financial situation after the divorce.
The procedure for dividing pension assets is designed to ensure an equitable distribution of resources between the spouses after the dissolution of the marriage, thus helping to ensure their long-term financial security.
The court’s decisions are guided by the principles of justice and fairness.
The legal principle of sharing by half
Introduction to half and half
In Switzerland, the division of pension assets by half is an essential legal provision in divorce proceedings.
This measure is designed to ensure fairness between spouses by distributing assets accumulated during the marriage on an equitable basis.
The aim of the occupational pension system, or second pillar, is to maintain the standard of living of insured persons after retirement, and the division by half ensures that the sacrifices and contributions of each spouse are recognized and financially balanced.
Halving takes into account the different economic and social dynamics of a marriage.
For example, it recognizes the efforts of a spouse who may have reduced his or her professional activity to raise children or support the other’s career.
This principle is the rule in divorce cases.
However, it should be noted at this point that it is possible to derogate from it, either by law or by agreement.
Calculation of sharing
The calculation of the division of pension assets begins with the determination of the contributions accumulated by each spouse during the marriage.
The date on which the divorce petition is filed is the reference point for this calculation.
The assets accumulated by each spouse during the marriage are added together, then divided by two.
Each spouse thus receives an equal share of this total sum, reflecting the financial and non-financial contributions of each.
The calculation process takes into account various factors, including employee contributions, employer contributions and returns generated by the pension funds.
This distribution process aims to be transparent and fair, ensuring that the financial resources accumulated during the marriage are shared fairly.
Calculations are made in such a way as to accurately reflect the contributions of each spouse, whether direct or indirect.
Impact of length of marriage on division
The length of the marriage plays a crucial role in the amount of assets to be shared.
A long-term marriage generally means that substantial contributions have been accumulated, which increases the amounts to be shared.
On the other hand, in a shorter marriage, the assets accumulated are often lower, which can reduce the amounts to be shared.
This principle ensures that the division reflects the proportional contribution of each spouse over time.
The length of the marriage influences not only the amounts to be shared, but also how these funds may be received by the spouses after divorce.
For example, a longer marriage may involve more complex financial planning to ensure that the needs of each spouse are adequately covered.
This approach aims to maintain fairness while taking into account the cumulative contributions and long-term economic stability of the spouses.
Special features of EPL buyback and payment
Pension buy-ins and advance payments for home purchase (EPL) introduce particularities into the calculation of the division of pension assets.
Amounts purchased to cover pension gaps or withdrawn to finance the purchase of a property must be taken into account when calculating the assets to be divided.
If one of the spouses has made an EPL purchase or withdrawal during the marriage, these amounts are included in the overall calculation to ensure an equitable distribution.
Pension purchases enable a spouse to top up his or her contributions to improve pension cover, while EPL withdrawals are often used to finance a joint home.
Including these amounts in the calculation of pension assets to be shared ensures that investments made during the marriage are distributed fairly.
This measure ensures that the financial efforts of both spouses are correctly reflected in the distribution of assets.
Legal and contractual limits on the sharing of one-half of the profits
Agreement to waive division by half
As part of their divorce settlement, the spouses may choose to waive the 50-50 split of their occupational pension assets, or to provide for a different distribution key.
This decision is usually formalized by a specific clause in the divorce agreement.
However, it is imperative that the spouses ensure that adequate pension and disability provision remains in place for the spouse who would have been a creditor under the 50-50 split.
This requirement does not necessarily mean that each spouse must have identical pension assets, but rather that each party benefits from sufficient financial protection.
It is important to note, however, that even in the event of a waiver, the judge retains the discretionary power not to ratify the agreement and to balance the spouses’ pension assets.
Limitations on contractual exemptions
Although spouses are free to agree to deviate from the principle of division by half, this possibility is not without limits.
Agreements must meet certain conditions to be valid and fair.
For example, any waiver must guarantee sufficient provision for the spouse who would have been disadvantaged by the division by half.
In addition, the judge may refuse to ratify such an agreement if he or she considers that it is contrary to the best interests of the spouses, or that it compromises their future financial security.
In order to determine whether the agreement between the spouses is equitable, the judge will therefore have to take into account all the circumstances of the case, and determine whether the agreement derogating from the one-half principle respects the principle of equity and allows for a fair and coherent division.
Exception to division by half decided by the judge
Certain circumstances, such as a short marriage, a large age difference between the spouses or a significant disparity in assets, may justify a waiver of the 50/50 split.
The divorce judge has the discretionary power to award less than half of the termination benefit to the creditor spouse, or not to award any at all, for justified reasons.
Where the 50/50 split is deemed unfair, the judge may decide to depart from it, taking into account various factors such as the outcome of the liquidation of the matrimonial property regime or the economic situation of the spouses after the divorce.
In making this determination, the judge will take into account all the circumstances, including the economic situation of the spouses, their age, and the outcome of the matrimonial property regime after the divorce.
Unable to share
In certain specific cases, the division or balancing of pension assets may become impossible.
For example, if one of the spouses has already used all or part of the capital, if part of the pension assets are abroad, or if the assets are invested in non-recoverable real estate.
For example, if one of the spouses has already used all or part of his or her pension capital, if the assets are abroad, or if they have been invested in inaccessible real estate.
In such cases, the court may order the payment of an equitable indemnity, ensuring that each spouse benefits from adequate pension provision.
The parties may agree on an equitable amount, or the court may fix it according to the circumstances.
There are also differences in pension schemes from country to country, sometimes requiring adjustments to ensure fairness in sharing.
Property management in the event of divorce
Gathering the necessary documents
The first step in property management during a divorce is to collect the documents needed to assess all the couple’s assets and liabilities.
This includes bank statements, title deeds, marriage contracts and any other relevant documentation.
This exhaustive collection ensures a fair distribution of assets between the spouses.
It is also important to verify the authenticity of the documents collected to avoid any subsequent disputes.
Spouses must be transparent and provide all the information requested to facilitate the process.
Legal assistance can prove invaluable at this stage, helping to identify the necessary documents and interpret their contents appropriately.
Family lawyers can guide spouses through this delicate process.
Valuation of assets and liabilities
Once the documents have been collected, it’s essential to carry out a careful assessment of the couple’s assets and liabilities.
This assessment helps determine the value of each asset and debt, facilitating the process of equitable division.
Spouses must be transparent and collaborative throughout this stage to avoid future conflicts.
Financial experts can be consulted to accurately assess the value of assets, particularly in the case of complex assets such as investments or businesses.
Their expertise can help avoid valuation errors that could jeopardize the fair sharing of assets.
Discussions between spouses when drawing up an agreement
Discussing the division of assets is often one of the most delicate parts of the divorce process.
Spouses need to discuss their financial needs and preferences openly and honestly, taking into account the advice of their respective lawyers.
Compromises may be necessary to reach a mutually acceptable agreement.
Spouses may consider different options for dividing assets, such as selling assets, buying out the other spouse’s share, or dividing assets equally.
Each option must be carefully examined to determine which is best suited to the couple’s unique situation, bearing in mind that their decision is always subject to ratification by the judge.
Practical implications of property division
Once the division of property has been agreed, concrete steps must be taken to effect the transfer of ownership.
These may include the sale of real estate assets, the transfer of title deeds, the liquidation of bank accounts, and other actions necessary to finalize the divorce financially.
Careful monitoring of these steps ensures that the division of property proceeds legally and transparently.
It is important to respect the deadlines and procedures established for each stage of the property transfer process to avoid unnecessary delays or complications.
Specialist lawyers can provide valuable guidance on the steps to follow to ensure a smooth transfer of ownership.
