The structural reform of the pension equalisation system
While the intended changes to the law on maintenance as of 1.1.2008 were extensively reported even before the adoption of the law now in force, other family law reforms have gone relatively unnoticed. However, the structural changes that have taken place in recent decades do not only affect maintenance law, but also extend, for example, to pension provision.
Germans’ old-age provision undergoing major change
Although Norbert Blüm was still assuring us in 2002 that pensions were secure, even salaried employees had long since started taking out supplementary pensions. Due to the state support of these insurances – no matter if Riester or Rürup pension – the old-age provision of the Germans has changed. The old system no longer does justice to this transformation. The previously applicable law on pension rights equalisation provided for the one-off equalisation of all pension rights after an overall balance sheet had been drawn up.
Whereas in the case of divorce in 1988, for example, it was usually only pension entitlements with the BfA that had to be settled, the situation has now changed fundamentally. If today a woman wants to get divorced who has already acquired pension entitlements in the former GDR before reunification and whose husband has taken out an occupational pension with a company and a supplementary pension through a pension insurance with capital option, the preparation of the overall balance sheet already turns out to be difficult. This is because the value of the different vested rights must be put in relation to each other.
What are the pension entitlements from the GDR worth in relation to the entitlements with the BfA? In the meantime, is the company pension higher than the statutory pension? If an annuity policy was taken out with elective rights, surely that could be an asset – in which case a financial settlement would have to be made in the gain? Largely unnoticed, there is an increase in the number of supreme court rulings that determine the invalidity of valuations or calculations of pension entitlements. If such a case exists, the pension rights adjustment cannot be carried out.
– The cash value regulation, which was intended to enable the comparative calculation of fully dynamic and dynamic expectancies, was already regarded by the Federal Supreme Court (BGH) on 5.9.2001 (Ref.: XII ZB 121/99) as no longer suitable for carrying out an appropriate pension equalisation. The present value regulation was “in fact based on – outdated – assumptions about basic biometric probabilities (mortality and invalidity probabilities) obtained from demographic material dating from 1920 to 1940”. The legislator was requested to adapt the BarwertVO to the changed actual circumstances by the end of 2002. The new cash value regulation has been held to be ineffective in isolated cases by the courts, e.g. OLG Oldenburg decision of 28.7.2006, 11 UF 61/06.
– As a rule, proceedings on the equalisation of pensions are also separated from the divorce proceedings if one spouse has acquired pension entitlements from the GDR. The valuation of pension entitlements has not yet been regulated.
– In its ruling (Ref.: IV ZR 74/06), the Federal Court of Justice (BGH) also considered the calculation of the so-called starting credit to be erroneous. This is a valuation factor that forms the basis for determining pension entitlements in the public sector.
On 21 May 2008, the Federal Cabinet passed the Act on the Structural Reform of the Pension Equalisation Scheme. Instead of the external division of pension entitlements, pension equalisation is now to be carried out internally, i.e. within the respective pension provider. As a result, this means that in the case constellation described above, the occupational pension would have to be paid not only to her former employee, but also proportionately to his divorced wife. This eliminates the need for a proportionality test of the different pension entitlements in relation to each other – the expense is borne by the pension providers when pensions are paid out to two pensioners.
by Dr. Johannes Fiala and Gabriele Jodl, attorney at law
by courtesy of
www.landpost.de (published in Landpost, issue 33/2008, page 25)
and
www.nailandbodyprofessionell.de (published in Nail & Body; issue 12.2008, pages 35-36 under the heading: Structural reform of pension equalisation)
and
www.der-bau-unternehmer.de (published in The Contractor , August/September 2008 issue, page 6, under the heading: Unnoticed changes in family law)
and
www.halstenbeker-magazin.de (published in Halstenbeker Magazin, issue 09/2008, page 28 under the heading: Changes in family law)
Our office in Munich
You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.
About the author
Dr. Johannes FialaPhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
»More about Dr. Johannes Fiala
On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.
Arrange your personal appointment with us.
You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.
(The first phone call is a free get-to-know-you conversation; without consulting. You will learn what we can do for you & what we need from you in terms of information, documents for a qualified consultation.)
