The proportion of cohabiting families has risen sharply in the last decade: One in five couples with children under the age of five is now unmarried. Unmarried mothers are therefore often exposed to considerable pension risks.
A recent study by Swiss Life sheds light on the pension risks arising from part-time work, divorce and cohabitation. It shows that Employment biographies and family models in Switzerland are changing - which brings opportunities for women in particular, but also new challenges for retirement provision.
Proportion of cohabiting families has risen sharply
The proportion of cohabiting families has risen sharply in the last decade: One in five couples with children under the age of five is now unmarried, compared to just over one in ten in 2010. In terms of employment, there are still pronounced role models: Fathers in this country work around 40 percentage points more than mothers. However, if fathers and mothers were free to choose, this difference would be more than halved.
The likelihood of divorce is also underestimated
Every marriage will end in divorce or death. However, respondents underestimate the risk that their own marriage could end in divorce: On average, they rate it as similarly high as their own risk of widowhood before retirement. In fact, around 4.5 times as many women of working age get divorced than become widowed. Furthermore, only 26% of married men and 19% of women consider in detail how a divorce would affect their retirement provision, even though a divorce would often have negative financial consequences for both ex-spouses. On average, women are more affected: Among today's divorced retirees, the gender pension gap is around 15%.
Role models continue to shape labor force participation
According to the authors of the study, there are various reasons for the gender differences in labor market participation. On the one hand, there are clear role models: On average, respondents think that a workload of 50% is ideal for mothers of young children and 80% for fathers. On the other hand, the gender differences in working hours according to the population's ideal are smaller than those observed. If they were free to choose, fathers would work a lower average workload (74%) than they do (93%), while mothers would work slightly more (58% instead of 54%). This indicates that it is not only preferences or role models that are responsible for participation in the labor market, but also practical constraints. The survey shows that around a third of mothers who do not work or work part-time cite too few or too expensive nursery places or extracurricular childcare options as a reason for not working or only working part-time.
Women's lower lifetime earnings are the reason for the gender pension gap
A key factor in the gender pension gap is the difference in lifetime earnings between women and men, which is primarily a result of mothers reducing their working hours. The average gender difference in working hours fell from around 40 to 24 percentage points between 1996 and 2022. «And it is likely to narrow further, but it will not disappear in the foreseeable future», says Andreas Christen, head of the study. Lower earned incomes lead to lower pensions, particularly in occupational pensions, but also limit savings opportunities in the third pillar. According to the Swiss Life survey, women are less likely to pay into pillar 3a than men (56% vs. 65%), mainly due to their income. They also invest less frequently in investments such as shares, bonds or funds, regardless of their income (22% vs. 38%).
What does the workload mean for retirement provision?
«As long as there are major gender differences in labor market participation and earned income, we will also observe differences in pensions in old age after a delay of several years», notes co-author Nadia Myohl. However, only a minority of the women (37%) and men (41%) surveyed said that they had looked in depth at the consequences of their workload for their retirement provision. Those women who do so work an average of around 6 percentage points more than those who do not. However, it is not clear whether it is effectively the discussion of the topic that leads to higher workloads or whether there are other reasons for this.
Part-time mothers in cohabiting families bear more pension risks
More and more couples remain unmarried, at least initially. Unmarried mothers with a partner and children under the age of 15 work an average of 58% of the time and are therefore slightly more present on the labor market than married mothers (45%) - but clearly less so than fathers (around 90%). The sharp increase in these constellations leads to new pension challenges, as part-time working mothers in cohabiting households are less well protected than married mothers in the event of separation or the death of their partner.
Theoretically, such gaps can be reduced through private provision and contractual agreements. However, whether this is done sufficiently is questionable to say the least. «According to our survey, even cohabiting parents rarely deal with the pension issues relevant to them in depth», says Christen.