Divorce Fifty-fifty applies to pensions

New rules for pension settlements came into force at the start of the year, offering more flexibility – the key points in brief.

by Stephan Lehmann-Maldonado 17 Apr 2017
Divorce can also hurt financially. That’s why a separation arrangement should ideally serve the interests of both partners. Photo: Thinkstock

All attempts have failed. Anna and Albert can no longer find any common ground. They see no other option but to divorce. However, both are just coming up to retirement. How will this affect their pensions?

When it comes to divorce, sharing applies to pensions, too. Neither partner should be able to benefit to the detriment of the other. Under Pillar 1, the AHV, both partners get their own AHV pension instead of the married couple’s pension. To calculate the pensions, the incomes the couple earned during the marriage are split.

Check your pension fund

There is more flexibility under Pillar 2. Retirement assets the partners accumulated during the marriage are divided up equally. Assets from before the marriage – and the interest on them – will remain with the pension fund owner. If your wife does not have a pension fund, for example, it is now possible to transfer the money to the BVG Substitute Occupational Benefit Institution. This makes sense, as this institution can pay a lifelong pension. If, on the other hand, a couple can show enough put by for a secure retirement, they can opt not to divide up the retirement assets. The settlement is then paid from free assets. Since the start of 2017, the date when the divorce proceedings started is now relevant for the pension settlement, rather than when these concluded. In addition, retirement settlements are now also made when one spouse is already drawing a pension; this pension must also be divided.

Let’s look at Pillar 3a. If you haven’t agreed to a different matrimonial property regime, the principle of joint ownership of acquired property is the principle that applies here. Under this, assets that are acquired jointly are shared equally upon divorce. This means that a Pillar 3a account opened during the marriage must be shared. You can find more information at ubs.com/pension. Take advantage of our help before deciding on a course of action.