Death and pillar 3: who are the beneficiaries of the capital?

What is pillar 3 and its death capital?

The Swiss pension system is based on three pillars: AHV/IV (pillar 1), occupational pension provision (pillar 2) and private pension provision (pillar 3). The latter allows you to supplement your retirement cover and protect your loved ones.

The death capital of pillar 3 represents the amount paid to beneficiaries if the holder dies before having withdrawn their capital. This payment follows specific rules, different from standard succession.

There are two types: pillar 3a (tied) and pillar 3b (free). Pillar 3a offers tax advantages but imposes a strict order of beneficiaries. Pillar 3b allows complete freedom in designation.

This distinction is essential: the capital does not automatically fall into the estate. It is paid directly to the designated beneficiaries, according to precise rules that we detail below.

The legal order of pillar 3a beneficiaries

Pillar 3a follows a strict order defined by the OPP3 (Ordinance on Occupational Old Age, Survivors' and Invalidity Pension Provision). You cannot freely designate just anyone.

Here are the 5 ranks of beneficiaries:

• Rank 1: Spouse, registered partner or cohabitant (subject to conditions)
• Rank 2: Direct descendants (children, grandchildren) and persons dependent on you
• Rank 3: Parents
• Rank 4: Brothers and sisters
• Rank 5: Other legal heirs

For cohabitation, two conditions: living together for at least 5 years or caring for common children. You must declare this situation to your pension institution.

Important: this order takes precedence over your will. Pillar 3a capital does not follow standard succession law. If you have a spouse, they will be the priority beneficiary, even if your will provides otherwise.

Can the order of beneficiaries be modified in pillar 3a?

You cannot change the order of ranks in pillar 3a. The legal order remains fixed. It is impossible, for example, to favour your parents over your spouse.

However, you can choose within the same rank. If you have three children, you can decide to distribute the capital differently between them or to exclude one.

To modify your beneficiary clause, contact your pension institution or your insurer. Complete the modification form and return it signed. Some institutions now allow this process to be done online.

Remember to update regularly: after a marriage, divorce, birth or separation. An obsolete clause can create complex situations. Your former spouse could remain a beneficiary if you have not changed anything after the divorce.

Pillar 3b: complete freedom of designation

Pillar 3b works differently. Here, you benefit from complete contractual freedom to designate your beneficiaries. No legal order is imposed.

You can designate anyone: a friend, an association, an unrelated person, or even distribute the capital between several beneficiaries according to your wishes. This flexibility is closer to a standard life insurance policy.

This freedom presents advantages for certain situations: unmarried couples without common children, people wishing to favour a particular loved one, or those who want to pass on to a charitable organisation.

The trade-off? Pillar 3b does not offer the same tax advantages as pillar 3a. Premiums are not deductible from taxable income. It is up to you to weigh the pros and cons according to your personal situation and priorities.

Special cases and complex situations

Certain situations require particular attention regarding pillar 3 death beneficiaries. Here are the most common cases that raise questions for families.

Cohabitation and pillar 3

In pillar 3a, your cohabitant can be a beneficiary at rank 1, but under strict conditions: you must have lived together for at least 5 years or have common dependent children.

You must also explicitly declare your cohabitant to your pension institution. Without this declaration, they will not be recognised as a beneficiary, even if the conditions are met.

For unmarried couples without children and living together for less than 5 years, pillar 3b offers better protection. You can freely designate your partner as beneficiary, without any duration condition.

Advice: if you are cohabiting, regularly check that your declarations are up to date and correspond to your current situation.

Divorce and separation

After a divorce, your former spouse does not automatically lose their status as beneficiary of pillar 3a. If you do not modify your clause, they remain at rank 1 and will receive the capital in the event of death.

Remember to update your beneficiary clause as soon as the divorce is pronounced. Contact your pension institution to make this modification.

Pillar 3a capital is also part of the liquidation of the matrimonial regime during divorce. It can be shared between spouses according to the rules for sharing occupational pension provision.

In the event of separation without official divorce, your spouse remains the legal beneficiary. Only a divorce or a change of clause can modify this situation.

Absence of designated beneficiaries

What happens if no beneficiary exists or can be found? In this case, the death capital falls as a last resort into the standard estate.

The pension institution carries out searches to locate potential beneficiaries. If no one comes forward after a reasonable period, the capital is paid to the estate and follows the rules of succession law.

To avoid this situation, keep your contact details up to date with your institution. Also inform your loved ones of the existence of your pillar 3a and the name of your insurer or bank.

If you are a potential beneficiary of a deceased person, contact their financial institutions quickly. Deadlines may apply for claiming the capital.

Taxation of pillar 3 capital in the event of death

The death capital of pillar 3 benefits from taxation separate from standard succession. It is not subject to ordinary inheritance tax, but to a specific tax regime.

For pillar 3a, the capital is taxed at a preferential rate, generally lower than inheritance tax. Direct beneficiaries (spouse, direct descendants) often benefit from total or partial exemptions depending on the canton.

Pillar 3b follows the rules of standard death insurance. Taxation depends on the relationship between the deceased and the beneficiary, with significant variations between cantons.

Important: taxation is based on the place of residence of the deceased, not the beneficiary. Cantonal differences can be significant. Some cantons completely exempt the spouse and descendants, others apply a reduced rate.

For more information on financial assistance after a death, consult our complete guide.

Steps to recover the death capital

If you are a beneficiary of death capital, here are the steps to follow to recover the amount:

1. Inform the institution
Contact the bank or insurer that manages the deceased's pillar 3a or 3b quickly. Announce the death by telephone, then confirm in writing.

2. Gather the documents
You will need to provide: the official death certificate, proof of identity, a certificate of inheritance (depending on the case), and proof of your relationship with the deceased (family record book, cohabitation certificate, etc.).

3. Complete the form
The institution will send you a payment request form. Complete it with your bank details and return it signed with the required documents.

4. Payment deadline
The capital is generally paid within 4 to 8 weeks after receipt of the complete file. This deadline may vary depending on the institution.

Advice: do not delay in carrying out these steps. Some contracts provide for claim deadlines to be respected.

Pillar 3 capital often represents a significant amount for loved ones after a death. Understanding the legal order of beneficiaries in pillar 3a and the freedom of designation in pillar 3b allows you to anticipate the transfer of this capital. Special situations such as cohabitation, divorce or the absence of direct heirs require particular attention and sometimes specific steps with your pension institution.

The advantageous taxation of death capital and the relatively simple procedures facilitate the recovery of funds by beneficiaries. Remember to inform your loved ones of the existence of your pillar 3 and to regularly check that the beneficiary clause still corresponds to your current family situation.

Beyond financial aspects, honouring the memory of a loved one also involves sharing. On funere.com, you can publish an obituary accessible to all, create a memorial page and allow those around you to pay their respects with dignity, wherever they are.