Occupational pension provision fulfills many duties. For example, in the event of the death or disability of the insured person, it also protects his or her relatives. Who is one of the beneficiaries is regulated by the law and the regulations of the pension fund.

Occupational pension provision is not limited to pension provision after retirement, but also covers the risks of death and disability. In the event of death, survivor benefits are paid in the form of capital or pension. The regulations applicable to survivors depend on the pension plan of the respective pension fund with which the deceased person was insured. The employer chooses the pension fund with which he insures his employees and the pension plan for each category of employee. He consults the employees or the employee representative, as Astrid von Wyl explains in «Social security CHSS». And she continues: «The minimum legal requirements are laid down in the federal law on occupational retirement, survivors’ and disability pension plans (BVG), in particular with regard to the beneficiaries in the event of death and the amount of benefits. However, pension funds can go beyond the BVG minimum and provide additional benefits and other categories of beneficiaries. In this case, one speaks of super-compulsory pension provision.»

Who are the beneficiaries?

The BVG clearly defines the group of beneficiaries of the compulsory occupational pension provision: they are persons who are or were in a legal relationship with the deceased person, relatives or children (Articles 19, 19a and 20 BVG). Specifically: spouses and former spouses, registered partners and former registered partners as well as children and orphans. The same criteria apply to orphans as in the first pillar. The claim to an orphan’s pension expires at the age of 18 of the beneficiary child or at the conclusion of education, but at the latest at the age of 25.

«From the point of view of social law, the protection of survivors is therefore based on a traditional, narrow concept of family, which excludes de facto partnerships such as non-marital partnerships. Moreover, all beneficiaries are on the same legal level, which means that there is no so-called cascade regulation. If someone fulfills the conditions, he or she is entitled to benefits», says Astrid von Wyl’s execution.   

Who receives which benefit?

As von Wyl further explains, pension funds may also provide for further beneficiaries in their regulations (Article 20a BVG). In this so-called supercompulsory pension provision, the economic community with the deceased person is also important for determining the beneficiaries in addition to the kinship and legal relationship.

The group of beneficiaries is finalized in the BVG and cannot be extended by the pension fund. It is also tied to the order of precedence between the different groups of beneficiaries: only if there are no first-tier beneficiaries can survivor’s benefits be granted to second-tier beneficiaries. And only if there are no first-tier beneficiaries can benefits be paid to third-tier beneficiaries. Within a rank, the insurance benefit is divided equally among all persons in the rank group. However, depending on the regulations, the insured person may determine the shares within a rank.

The supercompulsory pension provision may provide for more generous benefits in addition to additional beneficiaries. However, pension funds may lay down formal requirements regarding the notification of future beneficiaries (e.g. in writing and during the insured person’s lifetimes). In addition, other requirements may apply, such as, for partnerships, cohabitation at the same address for at least five years before death.

However, in the supercompulsory scheme there is no automatic entitlement to benefits from the pension fund. Benefits may vary depending on the pension plan, for example as regards the guarantee of a pension for the person with whom there was a partnership. Without a regulatory basis for the entitlement scheme or if there are no beneficiaries, the capital goes to the pension fund. In this case, even the heirs cannot request repayment of the contributions paid by the insured person, since there is no unjust enrichment on the part of the pension fund.

Limitations of the system

According to Wyl, it may happen that non-mandatory occupational benefits do not benefit persons even though they are economically dependent on the deceased. This applies in particular to partnerships and siblings.

«If the person who has formed a partnership with the deceased person is already receiving a survivor’s pension under the second pillar from a previous marriage, there is no claim to an additional survivor’s benefit. The new living situation and the economic situation of the subsequent partnership are thus not taken into account», says von Wyl. However, the second pillar pension that the surviving partner receives due to a previous marriage could be lower than any new benefit based on the more current partnership. «In this case, the person who had a partnership with the deceased may be at a disadvantage.»

When are children entitled to claim an orphan’s pension?

According to the BVG, children of the deceased person who are younger than 18 or who are in education up to the age of 25 are entitled to claim an orphan’s pension. In the case of children who are older than 25 or who are not in education between the ages of 18 and 25, a possible benefit depends on the supercompulsory pension provision. «In the case of siblings, unequal treatment may occur, depending on whether the child is still in education or whether it is already of age and has already completed education», says von Wyl.

She explains this with an example: «Suppose Maria dies and leaves behind two children. Mia, a 24-year-old doctor in training, would receive the entire survivor’s benefit. Her brother Noah, a 22-year-old computer scientist, would receive nothing. This difference explains the fact that the legislature assumes that a child who has completed vocational training has financial independence. The financial consequences for the children concerned are considerable, depending on the situation, since survivors’ benefits paid out as capital may be large amounts.»

Does the system need to be adapted?

Von Wyl concludes: «While the compulsory pension provision is governed by strict regulations, the supercompulsory pension provision offers more flexibility, with a strict hierarchy of beneficiaries. This leads to different treatment of survivors and different pension funds. The limitations of the system show how important adjustment to current social conditions is.»