Pension Equalization for Managing Directors: Practical Steps After Divorce
Following a divorce, the old-age pension accrued during the marriage by a managing director (DGA) must be equalized. According to Article 2 of the Pension Rights Equalization Act (Wet VPS), this is done through conversion into an individual pension entitlement or periodic compensation. For DGAs with their own private limited company (BV), this process is often complex due to the Old-Age Reserve (FOR). The first step involves an actuarial calculation of the accrual during the marriage, taking into account the available tax facilities.
The parties must report the equalization to the pension administrator or the Tax and Customs Administration. In cases of self-administration within the BV, the reserve must be converted, which may trigger taxation in Box 1. Alternatives include redemption or average distribution via a notarial deed. Tax advice is crucial to avoid double taxation. The former partner acquires a claim on the pension fund, payable upon retirement. In the event of death, the Surviving Dependants Act (Wet LBIO) applies to survivor’s pension. Practical examples show that timely reporting within two years of the divorce prevents penalties.
Important: if marital conditions include an exclusion clause, equalization does not apply unless otherwise specified. Always consult a tax advisor for BV transfers linked to pension arrangements.