Pension rights to which the Law on equalization of pension rights in case of divorce (WVPS) applies and related rights to survivor’s pension do not fall into the matrimonial community. The WVPS stipulates that in the case of divorce the entitlements to retirement pension accrued during the marriage are equalized, regardless of the matrimonial property regime. Claims for survivor’s pension are settled on the basis of the Pensions Act.
The WVPS has three forms of compensation.
1. The standard method means that the pension entitlements to be equalized are equally distributed.
2. The parties may deviate from this in the marital conditions or in a divorce agreement.
3.The third method is to convert the entitlement to the part of the old-age pension and the entitlement to a special survivor’s pension into an individual entitlement to an old-age pension. The part of the old-age pension that is converted does not necessarily have to be half of the old-age pension to be paid out. The equalization of pension rights in case of divorce does not lead to the levying of income tax.
In the context of a divorce, not only the assets belonging to the matrimonial community were divided, but also the joint pension assets. The outcome was that both ex-spouses were given a similar wealth. Because the former marital home was allocated to the woman, the man was compensated by the allocation of a higher share of the pension rights and an annuity policy. If, when settling pension rights by choosing a different distribution, the equalization percentages deviate from the standard distribution for halves, this does not give rise to a correction in the distribution of the matrimonial property community. Only when the former spouses have refrained from applying the WVPS can the pension rights be used for an exchange of assets in the distribution of the estate.
In this case, the former spouses had not waived the application of the WVPS. In spite of this, the ex-wife gave part of her pension entitlements in exchange for the allocation of the house. According to Hof Den Bosch, a situation has thus been created in which pension entitlements, which are not part of the matrimonial property of civil law, are exchanged with an asset that has been part of this. This is a form of pension settlement because it leaves the principles of the WVPS. The amount of the settled pension was charged to the former spouse.
Because liquidation of pension entitlements has far-reaching consequences for tax purposes, financially for now and in the future, we advise consulting a pension specialist before a liquidation is agreed upon!