Divorce
All about the divorce issue in the 2nd pillar
Do you any have questions about the impact from a divorce on occupational benefits? “My pension fund” explains the necessary steps and the legal basis with the aim of preventing unnecessary disputes.
Overview of the basics
In accordance with divorce law, vested benefits accrued during a marriage must be divided.
The termination benefit (amount the withdrawing person receives) is paid in accordance with the legally valid divorce decree.
The money must remain in an occupational benefits insurance plan.
Legal basis
Settling the issue of pension benefits marks an important change in divorce law, which came into force on January 1, 2000. The law states that in the event of divorce, each spouse is entitled to half of the pension fund assets accrued during the marriage. This also applies to assets from vested benefits accounts and policies. Entitlement is mutual, irrespective of any matrimonial property regime.
Procedure
The pension fund calculates the vested benefits to be divided. For this it requires:
-the date when you were married
-the expected date of the divorce.
As long as no benefits case (i.e. retirement, disability, or death) occurs before the date of the divorce, the pension fund will confirm that the assets can be divided.
The amount calculated and the address to which benefits are to be sent are recorded in the divorce decree. If your eligible spouse is subject to occupational benefits insurance, the amount will be transferred to the pension fund in question. If not, it will be credited to a vested benefits account or policy.
Consequences of the division
The amount that the pension fund deducts from your retirement assets in accordance with the divorce decree also has financial consequences:
-Reduction in the projected retirement pension
-Potential reduction in benefits in the event of disability or death
Purchasing benefits in order to close the pension gap
Insured persons have the option to purchase pension fund assets voluntarily in order to close a pension gap. Purchases of this kind are tax deductible. As a rule, benefits that were purchased cannot be withdrawn again as a lump sum for three years from the purchase date. This blocking period does not apply to benefits purchases associated with divorce.