Pension and divorce
The Limited Community of Property Act [Wet beperkte gemeenschap van goederen] is applicable as of 1 January 2018. A new marriage or registered civil partnership is now established in limited community of property by default. A full community of property must be established through a notary. This has implications for the apportionment of possessions and debts upon separation.
However, this legislation does not include any amendments which affect the apportionment of a pension. Do you know what will happen to a pension if an employee separates? How is a pension apportioned in the case of separation?
Apportionment of old age pension
The apportionment of an old age pension applies in the case of spouses and registered civil partners. The apportionment of an old age pension is referred to as the equalisation of pension entitlements. Both your employee and their former partner are entitled to half of the old age pension entitlements which accrued while they were married or were party to a registered civil partnership.
Surviving dependent's pension
A separation also has implications for a surviving dependent's pension. Those implications depend on the type of surviving dependent's pension involved.
Surviving dependent's pension on an accrual basis
In the case of a surviving dependent's pension on an accrual basis a reserve is set aside for the disbursement of such pension to any surviving dependent(s). A surviving dependent's pension continues to exist even after separation. In the case of separation the value of any surviving dependent's pension entitlements that have accrued passes to the former partner. Such a pension for a former partner is referred to as a special surviving dependent's pension.
Surviving dependent's pension on a risk basis
In the case of a surviving dependent's pension on a risk basis there is a difference between that pension before the relevant retirement date and after it. The insurance of a surviving dependent's pension before the relevant retirement date ceases in the event of a separation. Where a pension participant dies before their retirement date, their former partner will not receive a benefit based on that insurance.
If a pension plan provides for a partner's pension after the relevant retirement date, the former partner will be entitled to a special partner's pension after that retirement date. Such a special partner's pension will be paid out following the death of the participant after their retirement date.
Your employee may stipulate derogating arrangements concerning the apportionment of their pension in a nuptial or civil partnership agreement, or the relevant separation covenant.
Usually the definition of a partner in a pension plan is based on cohabitation of six months or a notarial cohabitation agreement. You may consult your pension regulations to ascertain the definition of a partner for the purposes of your pension plan.
The legally stipulated equalisation of pension entitlements does not apply in the case of cohabiting parties who separate from each other. Such a former partner is not entitled to the relevant old age pension. The same rights and duties which apply in the case of a marriage or registered partnership apply in relation to cohabiting parties for the purposes of a surviving dependent's pension. Such a former partner is also entitled to a special partner’s pension
Notification of a pension administrator
In most cases, the relevant pension administrator must be notified of the termination of a relationship.
Notifying a pension administrator in your capacity as an employer
Are you required to inform the relevant pension administrator of the termination of one of your employees' relationship? We recommend that you notify the pension administrator of the termination of your employee's relationship. You may consult your pension administration agreement to ascertain what your obligations are. You depend on the information supplied by your staff for the purposes of such notification. We recommend that you regularly ask your staff to give notice of any changes.
Notification of a pension administrator by an employee
Is an employee required to notify the relevant pension administrator of the termination of their relationship? Yes, an employee must notify the pension administrator of the termination of their relationship and any derogating or other arrangements. Their employer does not play any role in this respect.
We recommend that you refer an employee to the text of the relevant pension regulations.
For more information concerning separation and pensions you may also refer your staff to the relevant government website.
If you have any questions about your pension plan, please contact Erik Vlietman on +31 (0)73 692 4771.