Under the Equalisation of Pension Rights in the Event of a Divorce Act (Wet Verevening Pensioenrechten bij Scheiding), pension entitlements accrued during the course of a marriage must be divided in the event of a divorce. The law contains a standard procedure for this, but this does not necessarily have to be followed and the spouses may decide to incorporate a clause in their prenuptial agreement expressly excluding the applicability of the Act. In this case, they are not under any obligation to equalise their respective pension rights in the event of their divorce.
Even if the Equalisation Act does apply, the spouses are free to depart from the standard procedure. Conversion is one option, in which one spouse’s share of the other spouse’s retirement pension and any partner's pension or special partner’s pension is converted into a specific retirement pension entitlement. Another option is the division of the pension entitlement by a formula other than 50-50, or commutation.
What can we do for you?
Our lawyers can advise you on the possible consequences, including the tax implications, of any arrangements that depart from the standard statutory procedure. If necessary, we can call in the help of one of the pension consultants in our network. Where a business owner builds up his or her own pension, we always advise you in consultation with an actuary or pension consultant.
Few people are aware that the law also covers the issue of entitlement to a surviving dependant's pension. Regrettably, a trend has emerged in the past few years for surviving dependant’s pensions to take the form of a fixed-term insurance, which means that there is no longer any entitlement to a pension after a divorce. We would recommend getting in touch with your pension fund or insurance company for detailed information on your surviving dependant's pension in the event of your former spouse dying before his or her retirement.