Beneficiary options in occupational benefits insurance, pillar 3a and the vested benefits account
Order of beneficiaries according to BVG
Who is entitled to benefits from the occupational benefit scheme? According to Art. 19 BVG and Art. 20 BVG it is the spouses and direct descendants who are entitled to a widow's/widower's pension and orphan's pensions. Art. 22a BVG states that "in addition" to these two groups of beneficiaries, the following persons can also be beneficiaries from the 3rd generation onwards:
- Spouse
- Orphans (for children under 18 or 25 if in education)
- a) Natural persons who have been supported to a considerable extent by the insured person, or the person who has lived with the insured person continuously for the last five years until his/her death or who is responsible for the maintenance of one or more joint children;
- b) In the absence of beneficiaries under letter a: the children of the deceased who do not meet the requirements of Article 20, the parents or the siblings
- c) in the absence of beneficiaries under letters a and b: the other legal heirs, excluding the community, to the extent of the contributions paid in by the insured person or 50% of the pension capital
is entitled to a widower's or widow's pension; who is older than 45 and the marriage lasted at least 5 years or is responsible for the maintenance of a child at the time of death. (18 years or 25 if in education). However, various pension funds have less strict rules and, for example, waive the age limit. If none of these conditions are met, the surviving spouse is entitled to a one-off settlement amounting to 3 annual pensions.
There is no entitlement to survivors' benefits if the beneficiary is already drawing a widower's or widow's pension.
Children of the deceased are entitled to an orphan's pension. Foster children and stepchildren only if the deceased provided for their maintenance free of charge.
To ensure the pension fund knows whom you want to benefit in the third stage, the corresponding form must be submitted to the pension foundation. Otherwise, for example, your cohabiting partner will not receive any benefits.
The two words "in addition to" and "may" mean that this benefit is offered to additional groups on a voluntary basis. Information on whether the employee benefits institution / pension fund to which you are affiliated offers this benefit can be found in the pension fund regulations.
The pension foundation is free to decide whether to accept all categories a, b and c or only one of them, for example. It is also permissible for the allocation within categories a, b and c to be freely determined. This means that if there are several beneficiaries, any lump-sum death benefit can be divided up on a percentage basis, otherwise it is distributed on a per capita basis.
Another feature is that lump-sum payments (lump-sum death benefit) are not included in the estate and therefore no action for reduction is possible. The lump sum is paid out directly to the beneficiaries and has no consequences under inheritance law, even if legal heirs would receive less than the compulsory portion.
Order of beneficiaries tied pension provision 3a
By default, the following persons are beneficiaries in the 3rd pillar after the insured person's death
- the surviving spouse or the surviving registered partner;
- direct descendants; persons who were supported to a significant extent by the insured person; the person who lived with the insured person without interruption for the last five years until the insured person's death; persons who are responsible for the maintenance of one or more joint children
- Parents
- Siblings
- Other heirs
In contrast to the BVG, the third pillar allows other persons such as descendants who are not entitled to a pension or, for example, a godchild, to benefit.
Apart from clause 1, which cannot be changed, you as the insured person have the option of changing the order of beneficiaries as follows:
- Section 2: You can designate one or more of the listed beneficiaries and determine their entitlements.
- Items 3-5: You can adjust the order of beneficiaries and determine their entitlements.
According to Art. 2 para. 2 BVV3 for example, everything can also be bequeathed to the life partner. Unlike the order in the BVG, parents are not at the same level as siblings in pillar 3a. However, direct descendants and life partners are automatically at the same level.
To ensure that the relevant pension foundation knows who you wish to benefit, the corresponding form must also be the corresponding form must be submitted. Otherwise, for example, the cohabiting partner will not receive any benefits and if there are no children, the capital will go to the parents in the next line.
Similar to the second pillar, many people are not aware of how to deal with third pillar pension assets. This can lead to misunderstandings among surviving dependants. We therefore recommend defining the order of beneficiaries of all pension assets at an early stage in estate planning, in addition to the will.
Conclusion
The 2nd and 3rd pillars as well as a separate vested benefits account can be important, cost-effective measures to benefit certain people in the event of death. So before you take out a pure life insurance policy or mixed life insurance in pillar 3a, you should have an expert carry out an analysis and check what the current benefits are. Particularly in the area of 3a insurance policies, a holistic analysis is often not carried out, but benefits are added on at one's own discretion, some of which are not even required. Even if the surviving spouse is the usual beneficiary, it is important to know which benefits flow where and from which vehicle in order to take this into account accordingly. Purchases into the pension fund can therefore have other advantages in addition to tax measures...
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