If you and your spouse are getting a divorce, you will each keep your own pension schemes. However, there are some exceptions.
The rules on sharing of pensions are not clear – they are based on a case-by-case assessment. Therefore, we always recommend that you and your spouse each seek advice from your lawyer/adviser if you are getting a divorce to make sure to see both sides of your specific case.
There are two main rules when it comes to sharing your pension:
You and your spouse will each keep your ‘reasonable’ pension schemes when you get divorced. This means that pension will not be included in the assets to be divided. This applies to annuity pension, capital pension as well as life annuity.
The rules do not stipulate what a ‘reasonable’ pension scheme is. As a general rule, an occupational pension scheme is ‘reasonable’ if it corresponds to what is normal for your profession and educational qualifications. For example, pension schemes under collective agreements and/or company pension schemes are ‘reasonable’.
In order to provide for the spouse with the lower pension savings, the spouse with the higher pension savings may in some cases be required to share his/her pension savings (in full or in part) with the other.
This compensation is typically triggered if one spouse has been a stay-at-home mother/father, on maternity/paternity leave or has worked part time to take care of the children and the home. Or if the spouse in question is placed in an ‘unreasonable’ position in terms of pension when a long marriage is terminated. This is assessed on a case-by-case basis.
If you and your spouse draw up a prenuptial agreement, it is entirely up to you to decide how to share your respective pension schemes in a divorce.
In the prenuptial agreement, you might for instance make your pension schemes separate property – meaning that they cannot and should not be shared. You may also decide that your pensions have to be shared regardless of whether or not the pensions are ‘reasonable’ at the time of the divorce.
Remember to register the prenuptial agreement in the Register of Marriage Contracts with the Land Registration Court in Hobro in order for it to be valid. Contact a lawyer if you want to draw up a prenuptial agreement.
Regardless of whether or not a basis exists for sharing your pension schemes, at least one of you will have to take steps towards such sharing. The outcome will be one of the following: Either you agree (e.g. because you have a prenuptial agreement) or you disagree. If you disagree, you have to take the case to the probate court.
Sharing is by cash payment. If, for instance, your pension scheme has to be shared, you either have to pay your spouse’s share in cash or compensate him/her in the division of property.
If that is not possible, you can pay the amount by instalments for up to 5 years. This will typically be the case if your wealth is tied up in a company which is also your source of income.
As a final option, you may transfer specific pension schemes to your spouse.
Remember to seek advice about sharing of pension from your lawyer or adviser if you are getting a divorce.
