New pension equalization rules for divorces
On January 1, 2017, new provisions will come into force that further differentiate the financial consequences of divorce.
The current provisions of divorce law have been in force since January 1, 2000. Since then, the spouses have in principle each been entitled to half of the pension entitlement acquired during the marriage, provided no insured event occurred. The fact that the financial situation of the divorced spouse often deteriorated significantly after the death of the former spouse due to the loss of alimony was perceived as unsatisfactory.
The provisions on pension compensation have now been revised with effect from January 1, 2017. It remains unchanged that the termination benefit acquired during the marriage is divided equally. However, the relevant date for calculating the entitlement is no longer the end of the divorce proceedings, but the initiation of the same.
A further innovation is that pension equalization also takes place if an insured event has already occurred. Either the current pension is divided or the calculation of the entitlement is based on the hypothetical termination benefit. If the current pension is divided, the divorced spouse is entitled to their own pension.
The detailed treatise can be found in the FSIO's Notices on Occupational Pension Provision No. 143 of 15.11.2016 (see link) Under certain conditions, pensions already in payment to divorced persons can be converted into pensions under the new law within one year.
This creates a new category of pensioners and pensions for the pension funds, the "divorced person's pension". If the entitled spouse is awarded a share of the pension assets but is not a member of a pension fund, the pension capital can now be transferred to the BVG Substitute Occupational Benefit Institution and later converted into a pension. In addition, the pension funds have new annual reporting obligations and there are new regulations on the allocation of the pension assets awarded to the mandatory or extra-mandatory portion.
