Company pension on divorce: how the pension adjustment divides it

Is a company pension divided on divorce?

A company pension is divided on divorce, because entitlements under occupational pension schemes are part of the Versorgungsausgleich (pension rights adjustment). It makes no difference whether they are paid out as a pension or as a lump sum § 2 (2) no. 3 VersAusglG. What is divided is the part built up during the marital period (Ehezeit), and the entitled spouse receives half of it § 1 (2) VersAusglG.

The marital period runs from the month of the wedding to the month before the Scheidungsantrag (divorce petition) is served § 3 (1) VersAusglG. Anything built up before or after stays out of it.

The forms company pensions take at banks

At a bank, a company pension can be set up in several ways, and the route chosen helps determine how it is divided:

• a pension fund (Pensionskasse) such as the BVV, with which many banks and financial service providers insure their employees,
• a direct commitment (Direktzusage), in which the bank itself promises the pension,
• deferred compensation, meaning salary that has been converted into a company pension,
• direct insurance (Direktversicherung) or another type of pension fund (Pensionsfonds).

If an entitlement is not yet vested, it is not divided at the divorce but equalized later § 19 (2) no. 1 VersAusglG. Entitlements from converted salary, on the other hand, are vested from the start § 1b (5) BetrAVG and are therefore divided at the divorce itself.

Internal division: a separate entitlement with the same provider

As a rule, the court orders internal division (interne Teilung) § 10 VersAusglG: the entitled spouse receives an entitlement of their own with the other spouse’s pension provider. If the pension is with the BVV, that means an entitlement of their own with the BVV. The provider’s division rules (Teilungsordnung) must ensure that this new entitlement is of equal value § 11 VersAusglG.

This is where mistakes can happen. If the provider calculates the new entitlement on less favorable terms than the old one, for example with a lower actuarial interest rate, its division rules fall short of these requirements. Under the case law of the Federal Court of Justice, the court then has to adjust the actuarial assumptions. With the BVV, this very question was disputed for a long time. So check which tariff is used to calculate the new entitlement.

External division: when the employer wants to pay out

In an external division (externe Teilung), the pension provider pays the equalization value (Ausgleichswert) as a lump sum to another provider chosen by the entitled spouse §§ 14, 15 VersAusglG. Without that spouse’s consent, the provider may demand this only for small values. For direct commitments and relief funds (Unterstützungskassen), the limit is much higher. It is the contribution assessment ceiling of the statutory pension insurance, expressed as a capital value § 17 VersAusglG.

For bankers with large direct commitments, this is the critical point. The new provider often calculates with a lower interest rate, and then the same capital buys a considerably smaller pension. The Federal Constitutional Court has upheld the rule BVerfG, judgment of May 26, 2020, 1 BvL 5/18. However, the courts must set the equalization value so that the entitled spouse does not suffer an unreasonable loss. At this point, it is worth having the calculation checked.

What the corresponding capital value means

The corresponding capital value (korrespondierender Kapitalwert) is an auxiliary figure for comparisons and agreements § 47 VersAusglG. The pension provider includes it in the information it supplies, alongside the equalization value. It does not tell you what the entitlement would be worth on the market, and comparing two entitlements by their capital values alone is often misleading.

An agreement instead of the division

Instead of the statutory division, you and your spouse can settle the Versorgungsausgleich (pension rights adjustment) yourselves in an agreement § 6 (1) VersAusglG. The spouse with the large company pension can then keep it, and the other is compensated from the assets instead. Before the divorce, such an agreement has to be recorded by a notary or set down as a settlement in the court record § 7 VersAusglG. The court also checks whether it is balanced § 8 VersAusglG. Where the limits lie is described in When the pension rights adjustment falls away.

What you need for the proceedings

In the proceedings, you and your spouse each list your entitlements in a questionnaire, and the court obtains information from the pension providers § 220 FamFG. Have the following ready:

• the pension commitment (Versorgungszusage) or the insurance policy, and for a pension fund such as the BVV, the latest annual statement,
• agreements on deferred compensation or salary conversion (Entgeltumwandlung),
• the contact details of the HR department responsible for the company pension.

How to fill in the questionnaire is explained in The V10 pension adjustment questionnaire: what matters.

The next step

At our office, attorney Mieke Karcher handles the Versorgungsausgleich (pension rights adjustment). If an agreement involving assets is on the table, attorney Dietrich Karcher joins her. The first consultation costs up to €190 plus VAT, at most €226.10 in total. If we take on your case, this fee does not apply. How the further fees are calculated is set out under Costs. Our pension rights calculator gives you a first overview. The overall framework is described on our page on the pension rights adjustment.