The division of pensions has to be dealt with separately from the division of other assets. After all, a pension is not an element of one’s assets, but rather a deferred salary. In terms of the Dutch Equalisation of Pension Rights in the Event of a Divorce Act (Wet verevening pensioenrechten bij scheiding), both spouses are entitled to half of the old-age pension accrued by the other party during the marriage. Any old-age pension accrued prior to the marriage is excluded.
Within two years after the divorce, joint arrangements have to be made regarding that part of the old-age pension accrued by each party during the marriage. This can be done using a special form. The advantage of completing the form is that you then have a direct claim for payment of your part of the pension by the other spouse’s pension fund. You are then paid the part reserved for you on a monthly basis, from the date that the other party attains retirement age. If you fail to notify the other party’s pension provider of the divorce within two years, then that pension provider will not pay out your part of the old-age pension to you directly. You’ll then have to approach your former partner. This makes it highly advisable to notify the pension provider within the two-year period. The form need not be signed by both parties, as unilateral notification is possible.
Survivor’s pension/partner’s pension
If any survivor’s pension or partner’s pension is accrued during the marriage, the former spouse retains those claims even after the marriage ends. The situation is different if the survivor’s pension is insured on a risk basis, in which case the claim lapses on divorce. Of course you can make different arrangements on this and we can provide you with specific advice.
A condition for equalising pensions and old-age pensions is that you must make a claim on the other party’s pension within two years after the divorce. This can only be done using a special form.
If the form is not submitted in time to the pension provider, your claim is not cancelled but the pension provider will not pay out directly to you. You’ll then have to contact your former partner. It is therefore highly advisable to submit the form within two years after dissolution of the marriage, to avoid any problems.
Making different arrangements
Different arrangements can also be made regarding the old-age pension. For instance, you may agree to exclude the application of the Dutch Equalisation of Pension Rights in the Event of a Divorce Act. There will then be no equalisation and each party will keep his or her own pension. You may also opt for conversion, where one partner transfers part of his pension to the other party who will then personally continue that pension. Conversion is only an option if the pension provider agrees to it. It amounts to exchanging the survivor’s pension for a higher share of equalisation of the old-age pension. If you need a survivor’s pension, it therefore makes sense not to opt for conversion.
If you have built up a pension under your own management in your own private limited company, things can become complex on divorce. Questions that might have to be dealt with include:
- What part has been accrued for my spouse?
- Must the part for my spouse be surrendered to a recognised insurance company?
- What are the tax consequences?
The latest is that an entrepreneur’s pension reserve has to be calculated on the basis of the current commercial value, so that the fiscal value is not sufficient. New legislation is expected to come into force shortly, which will relax the position of directors/major shareholders and abolish pension accrual under personal management. If the former spouse consents, one can then look for a more tax-friendly solution. This is a really complex problem area, where we would recommend working alongside a pension expert. We can engage a pension expert for you.