Pension earned abroad: what happens in the pension adjustment

Is a foreign pension divided in the pension rights adjustment?

A foreign pension is not divided at the divorce itself. The Versorgungsausgleich (pension rights adjustment) does include entitlements abroad § 2 (1) VersAusglG. However, an entitlement with a foreign, intergovernmental or supranational pension provider is not ready for equalization (ausgleichsreif) § 19 (2) no. 4 VersAusglG. For such entitlements, no equalization of value takes place at the divorce § 19 (1) VersAusglG.

The reason is practical. A German court cannot instruct a foreign pension provider to open a separate account for the other spouse. The entitlement is not lost to the adjustment, though: it is left for the time after the divorce § 19 (4) VersAusglG.

All of this assumes that the adjustment takes place under German law. When that is the case is explained in Two possible countries: where should we file for divorce?

Which entitlements count as foreign

Whether an entitlement counts as foreign depends on the pension provider: whether it is based abroad or is an intergovernmental or supranational body. Examples include:

• the statutory pension of another country, for instance from years in France or the UK,
• an occupational pension with a foreign employer or pension fund,
• entitlements with intergovernmental or supranational bodies, such as the EU institutions, which include the European Central Bank.

German entitlements, by contrast, remain ready for equalization, even if you now live abroad. Foreign retirement savings paid out as a lump sum raise a preliminary question: they belong in the adjustment only if they are set up to pay a pension. Otherwise they count as assets in the Zugewinnausgleich (equalization of accrued gains) § 2 (2) no. 3 VersAusglG.

Why German entitlements can be affected too

If one spouse has foreign entitlements, the court can hold back the remaining entitlements as well, to the extent that dividing them would be inequitable for the other spouse § 19 (3) VersAusglG.

An example without figures: you only have entitlements in the German statutory pension insurance, and your spouse mainly has an occupational pension in Switzerland. If the court divided only your German entitlements, your spouse would receive half of them right away, while you would have to wait for the Swiss pension. The provision is meant to prevent exactly this imbalance. The court decides whether, and how far, to hold entitlements back after weighing up all entitlements together.

How the adjustment after the divorce works

After the divorce, the spouse liable for the adjustment pays personally, as an equalization pension under the law of obligations (schuldrechtliche Ausgleichsrente) in the amount of the equalization value (Ausgleichswert) § 20 (1) VersAusglG. It only falls due once two conditions are met:

• The liable spouse draws the pension from the entitlement that was not equalized.
• The entitled spouse draws a pension of their own, has reached the standard retirement age or has reduced earning capacity § 20 (2) VersAusglG.

The court rules on it only if an application is filed § 223 FamFG. Instead of the ongoing pension, the entitled spouse can demand a lump-sum settlement, paid to a pension provider of their choice, to the extent that this is reasonable for the liable spouse § 23 VersAusglG.

The drawback of this route is obvious. It depends on the liable spouse actually paying, and if they live abroad, the claim has to be enforced there.

What happens if the liable spouse dies?

When the liable spouse dies, the pension the payments came from ends, and with it the equalization pension. For a foreign entitlement, the claim is then directed against their widow or widower, to the extent that the foreign pension provider pays that person a survivor’s pension (Hinterbliebenenversorgung) § 26 VersAusglG. If there is no such pension, there is nothing left to claim by this route.

It is precisely this risk that argues against leaving the adjustment open until retirement age.

An agreement can spare you the detour

By agreement, you and your spouse can settle the division of your pension rights yourselves instead of waiting for the post-divorce adjustment. The law allows you to include it in the settlement of your financial affairs, to exclude it or to expressly reserve it for the adjustment after the divorce § 6 (1) VersAusglG. In exchange, the spouse with the foreign pension can, for example, transfer part of their assets to the other.

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. Our page on the divorce settlement agreement shows what an overall arrangement looks like.

What the court wants to know from you

You have to declare your foreign entitlements in the proceedings yourself, because both spouses are obliged to provide information § 220 FamFG. The questionnaire on the adjustment serves this purpose. It is explained in The V10 pension adjustment questionnaire: what matters.

For each job abroad, have the following ready:

• employer, time period and pension provider,
• the latest pension statement or an insurance record,
• documents on occupational pensions and pension funds, even if they only exist in English.

Foreign providers often reply slowly, and the court has little influence on that. How this affects the length of the divorce is described in How long does a divorce take?

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 page on the pension rights adjustment describes the overall framework.