What happens to the pension fund assets in the event of death? In this article, we show you what survivors’ benefits the pension fund provides and how surviving dependants should proceed. You will also find out how the order of beneficiaries is regulated and what happens to any voluntary buy-ins.

Contents

What happens to the pension fund in the event of death? When is the lump-sum death benefit paid out?
Survivors pensions for spouses & cohabiting partners Order of beneficiaries
Survivor pensions for spouses & cohabiting partners What happens to voluntary purchases in the event of death?
Survivors benefits for singles without children What should I do as a surviving dependant?

What happens to the pension fund in the event of death?

The pension fund assets of a deceased person are generally paid out to the beneficiaries as a survivor’s pension. In certain cases, there is also an entitlement to a payment from the pension fund in the form of a lump-sum death benefit or lump-sum death benefit.

Important to know: What happens to the deceased person’s pension fund assets is not governed by inheritance law but by the Occupational Pensions Act (BVG). If you want to change the order of beneficiaries, you cannot do this in a will. You can find out more about this in the chapter “Order of beneficiaries“.

The only exception is if the deceased person has made a lump-sum withdrawal. The pension fund assets from a lump-sum withdrawal are subject to inheritance law and are included in the estate.

What are the requirements for payment of the pension fund in the event of death?

According to Art. 18 BVG, an entitlement to survivors’ benefits exists in principle only if the deceased was insured with a pension fund until his or her death. There are special regulations for persons:

  • with birth defects,
  • who became disabled as minors,
  • or who received an old-age or disability pension.

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Survivor pensions for spouses & cohabiting partners

Benefits for the surviving spouse

Spouses have a statutory minimum entitlement to a widow’s or widower’s pension in the event of the death of the insured person. However, there are conditions that must be met:

  • The surviving dependant is responsible for the maintenance of at least one child, or
  • she is older than 45 years, whereby the marriage must have lasted at least five years.

The pension amounts to 60% of the retirement or disability pension that the deceased would have received. In the extra-mandatory scheme, pensions may be higher than the statutory minimum. You can find out the exact amount in your spouse’s pension fund certificate.

If the surviving dependant does not fulfill the requirements, he or she receives a one-off settlement. The settlement is equivalent to three annual pensions.

In addition to the statutory requirements, the pension fund regulations may also provide for the payment of an additional lump-sum death benefit in the extra-mandatory part. This lump sum is sometimes even paid out in addition to the survivor’s pension.

Please note: Entitlement to the pension expires upon remarriage.

Provisions for cohabitation

The law does not provide for death benefits for unmarried partners. However, pension funds can stipulate in their rules that such benefits are possible.

The requirements for this? You must inform the pension fund during your lifetime that your partner is to be a beneficiary. A will is not sufficient for this. Contact your pension fund to find out how to make the notification.

In addition, the pension fund may only pay the lump-sum death benefit if the surviving person is looking after a joint child or if the cohabitation in a joint household lasted at least five years. The pension fund may not shorten this period.

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Survivors’ pension for Children

The children of the deceased are generally entitled to orphan pensions. Foster children are only entitled to a pension if the deceased person is responsible for their maintenance.

The entitlement lasts until the age of 18 or until the age of 25 in the case of children in education or disabled children. The orphan’s pension amounts to 20 percent of the disability pension or the current retirement pension drawn by the insured person (Art. 21 BVG).

These are the statutory minimum benefits of the pension fund. In the extra-mandatory scheme, the pension funds can set the conditions for orphan’s pensions themselves. This means that the orphan’s pension can also be higher.

In certain cases, children receive a lump-sum death benefit. You can find out more about this in the chapter on the lump-sum death benefit.

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Survivors benefits for singles without children

Do you have no children and are single? Then you need to check the regulations of your pension fund to see whether other people such as your parents or siblings are beneficiaries. Some pension funds do not allow this. In other words, your assets remain in the pension fund.

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When is the lump-sum death benefit paid out?

The exact rules on the lump-sum death benefit vary depending on the pension fund. As a rule, a lump-sum death benefit is paid out if no widower’s or child’s pensions are paid. For example, to adult children if no widow’s pension is paid out.

In some cases, however, pension funds also pay out a lump-sum death benefit if they provide other death benefits. You can find out what applies to you in the regulations of your pension fund.

The lump-sum death benefit is paid out once. The amount of the lump-sum death benefit is stated in the pension fund statement.

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Order of beneficiaries

The order of beneficiaries is divided into four groups and structured like a cascade. In the event of death, only one group is taken into account. Group 2 therefore only receives the survivors’ benefits if there are no beneficiaries in group 1, group 3 only if there are no beneficiaries in groups 1 and 2, and so on.

Group 1
The surviving partner from the marriage or registered partnership
Children entitled to an orphan’s pension
Divorced spouses (under certain conditions)
Group 2
Significantly supported persons
Life partner
The person who is responsible for the maintenance of one or more joint children
Group 3
“Independent” children
Parents
Siblings
Group 4
The other legal heirs to the exclusion of the community
Order of beneficiaries pursuant to Art. 19-20a BVG

How can I change the order of beneficiaries?

Some pension funds allow you to change the order of beneficiaries and their shares. The decisive factor is what is stated in the regulations of your pension fund. The following options are legally possible:

  1. Depending on the pension fund, it is possible to add persons from groups 2, 3, or 4 to group 1.
  2. You can say who should receive how much within a group (naming shares, e.g. 50 % for the surviving spouse, 25 % each for the two children).

You must inform the pension fund of such changes. The pension fund usually provides a form for this purpose (beneficiary regulations).

The surviving spouse and children are always entitled to the minimum BVG benefits. In addition, the surviving partner cannot be placed in a better position than the surviving spouse (e.g. if the divorce has not yet been finalised).

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What happens to voluntary purchases in the event of death?

There are different agreements on what happens to the accumulated retirement assets when the insured person dies. If the retirement assets are paid out to the beneficiaries in addition to the survivor’s pension, this is referred to as full restitution by the pension fund. Partial restitution is usually defined in such a way that only the voluntary purchases made with the foundation are “protected”.

What does it mean if the pension fund does not provide for a return on the retirement assets? In this case, the pension fund uses the retirement assets saved, including voluntary contributions, to finance the widower’s and orphan’s pension. For this reason, you should check exactly what applies to your pension fund before deciding in favour of a voluntary purchase.

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Survivors benefits: What should I do as a surviving dependant?

As the surviving dependant, you must inform the pension fund of the death. To do this, you usually need the death certificate and other documents. The pension funds usually provide a form. Contact your pension fund directly to find out what you need to do.

The pension fund calculates the entitlements after your notification. In principle, the pension fund pays the widower’s and orphan’s pension from the first day of the month following the death. Do you receive continued salary payments from the deceased person’s employer? Then the pension fund will only pay out the pension as soon as you no longer receive continued salary payments.

If you do not know which pension fund the deceased person was affiliated to, you can contact the former employer or instruct the BVG Substitute Occupational Benefit Institution to search for pension fund assets.

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