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What to consider in terms of beneficiary arrangements

What happens to your pension capital if you die? A beneficiary's declaration lets you decide.

The death of a loved one is a profound experience that can turn your life upside down. So that at least the financial consequences remain manageable, spouses, registered partners and designated cohabiting partners are entitled to a partner’s pension. Depending on the pension plan, a lump-sum payment on death can be insured in addition to the partner’s pension. And voluntary purchases are usually treated as an additional lump-sum death benefit. How do you find out if you have additional insured lump-sum death benefits? Take a look at your insurance certificate – you’ll find the amounts under “Lump-sum payment on death” and “Additional lump-sum death benefit”.

Partners can be nominated as beneficiaries under occupational benefits insurance through a simplified process. We have to be notified of the names of the beneficiaries during the insured’s lifetime. We recommend that persons living in a cohabiting partnership as well as anyone who has made provisions for an insured lump-sum payment on death or for an additional lump-sum death benefit should think about beneficiary arrangements.

What do I have to do?

Who is to receive the additionally insured lump-sum death benefits, and in what percentages, can be stipulated in a beneficiary’s declaration. In order to make beneficiary arrangements more flexible, you now have the option of apportioning the lump-sum death benefit percentage-wise to a specific group of persons independently of an existing partnership:

  • Group a: spouse/registered partner and children entitled to orphans’ pensions
  • Group b: companion in life (cohabiting partner) or the person responsible for the maintenance of joint children
  • Group c: other children
  • Group d: parents
  • Group e: siblings

Group a may now be combined with or ranked lower than other groups, and the lump-sum death benefit can be divided up proportionally within a group as you wish.

And how does that concern me?

At all events, it makes sense for cohabiting partners to think about beneficiary arrangements. That being said, married couples or registered partners should take note of important changes under the new rules: The spouse, registered partner or designated cohabiting partner is no longer automatically the sole beneficiary of the lump-sum death benefit. Without a beneficiary’s declaration, it will be divided proportionally between said partner and any children entitled to orphans’ pensions.

So when should I complete a (new) beneficiary’s declaration?

A beneficiary’s declaration form needs to be completed if you wish to diverge from the new standard, i.e. you do not want equal shares to be apportioned to your spouse and any children entitled to orphans’ pensions. If, for instance, your spouse is to receive the full lump-sum death benefit despite the presence of children entitled to orphans’ pensions, a beneficiary’ s declaration is required. The same applies if children entitled to orphans’ pensions as well as those with no pension entitlement (e.g. if they are older than 25 or in gainful employment) are to be factored in. This is naturally also the case if you have been living in a domestic/cohabiting partnership with your life partner for more than five years and the latter is to receive your full lump-sum death benefit. These examples are not exhaustive – Asga’s new policy is intended to take better account of more complex family and relationship structures.

Seize the opportunity to determine the proportional allocation yourself by completing a beneficiary’s declaration. We therefore recommend you review your personal situation even if you are married, living in a registered partnership or have already submitted a beneficiary’s declaration. Let us know how you envisage your beneficiary arrangements. We have put together further information for you here.