Pension and divorce: the basic rules
In a divorce, not only visible assets must be divided, but also pension rights. In the Netherlands, the Pension Equalization Act (WVPS) regulates how this works. The law stipulates that old-age pension built up during the marriage is in principle divided equally between both ex-partners. This applies to all pension schemes with a pension fund or insurer, including supplementary pension plans. The WVPS applies to divorces and dissolution of registered partnerships. It is important to understand that pension equalization applies automatically unless you make other arrangements in a prenuptial agreement or divorce covenant.
How does pension equalization work?
With pension equalization, your ex-partner is entitled to half of the old-age pension you built up during the marriage, and vice versa. This right only takes effect when retirement age is reached. The pension fund then pays your ex-partner their share directly. To arrange this, you must send the Notification of divorce form to the pension fund within two years of the divorce. If you don't submit the form within two years, you don't lose your right to equalization, but you must arrange the pension privately instead of through the pension fund.
Conversion: an alternative to equalization
Besides equalization, there is also the possibility of conversion. With conversion, the right to a portion of your ex-partner's pension is converted into an independent pension right of your own. The advantage is that you are no longer dependent on your ex-partner's life. With equalization, the payment stops if your ex-partner dies. With conversion, you keep your own right regardless. Conversion must be agreed upon by both parties and approved by the pension fund. It is a definitive choice that cannot be reversed.
Survivor's pension after divorce
The survivor's pension is a separate point of attention in divorce. If your ex-partner passes away, you may be entitled to a special survivor's pension. This is the portion of the survivor's pension built up until the divorce date. The amount and conditions depend on the pension scheme. In some schemes, the special survivor's pension lapses if you remarry. It is therefore important to verify your rights and include this in your financial planning after divorce.
State pension (AOW) and divorce
The AOW (General Old Age Act) falls outside pension equalization. The AOW is a basic pension paid by the government and is not divided in a divorce. Everyone who has lived or worked in the Netherlands builds up AOW rights independently. After a divorce, you receive your own AOW benefit, independent of your ex-partner. However, AOW can affect the amount of spousal alimony. Discuss this with your lawyer to prevent financial disadvantage.
Company pension (DGA) and divorce
If your ex-partner is a director-major shareholder (DGA) who has built up a company pension, the division becomes more complex. Since 2017, it is no longer possible to build up new company pension, but existing claims must still be divided in divorce. The value must be determined by an actuary. This can lead to discussion about the valuation method: fiscal value or commercial value. The difference can be significant. It is essential to engage an expert experienced with DGA pensions in divorce.
Take action: don't neglect your pension
Pension is often one of the largest assets in a divorce but is regularly overlooked. Make sure you take timely action and inform the pension fund about your divorce. Have a pension calculation made to know what you are entitled to. Consider whether conversion is a better option for you than equalization. At Advocaat bij Scheiden, we work with pension experts to ensure your pension rights are correctly divided. Contact us for expert advice on pension and divorce.