Pension Rights Equalization in a German Divorce (Versorgungsausgleich)

Pension rights equalization (Versorgungsausgleich) is the procedure that divides the pension rights both spouses acquired during the marriage equally between them when they divorce in Germany. It is one of the three main financial consequences of a divorce in Germany, alongside the equalization of accrued gains (Zugewinnausgleich), which shares out the increase in each spouse’s assets during the marriage, and post-marital maintenance.

Its legal basis is Section 1587 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), which refers to the Pension Rights Equalization Act (Versorgungsausgleichsgesetz, VersAusglG). The Act covers every right to old-age or disability provision acquired during the marriage, in Germany or abroad. This includes the German state pension (gesetzliche Rentenversicherung), civil servant pensions, professional pension funds for doctors, architects, or lawyers, company pensions, and private pension and disability insurance.

The idea behind it is that marriage is an economic partnership. Pension rights may be recorded in only one spouse’s account, but they usually result from a shared division of labor: one spouse’s career and pension contributions are often only possible because the other runs the household or cares for the children. The Federal Constitutional Court (Bundesverfassungsgericht) has recognized equal division, grounded in the protection of marriage and the equal rights of men and women under Article 6(1) and Article 3(2) of the German Basic Law (Grundgesetz), as the constitutional justification for pension rights equalization (BVerfGE 53, 257).

All rights to an old-age or disability pension acquired during the marriage are included, whether in Germany or abroad. In particular, this covers:

• Rights in the state pension
• Civil servant pensions and supplementary pensions in the public sector
• Company pensions (betriebliche Altersversorgung), including those paid out as a lump sum
• Professional pension funds (berufsständische Versorgungswerke), for example for lawyers, doctors, or tax advisors
• Private annuity insurance and state-certified pension contracts such as Riester and basic pension (Rürup) contracts

In practice, state pension rights and company pensions are the ones most often affected.

Pure capital life insurance (Kapitallebensversicherung), which pays a single lump sum rather than a regular pension, is generally not covered. Such assets are taken into account in the equalization of accrued gains instead. Policies with an annuity option can be treated differently depending on their terms and on how the option is used, so our lawyers assess these in each case. A right that is covered by pension rights equalization is never divided a second time through the equalization of accrued gains (Section 2(4) VersAusglG).

Each pension right acquired during the marriage is split in half, under the principle of equal division in Section 1 VersAusglG. The spouse who gives up part of a pension right is the obligated spouse; the spouse who receives it is the entitled spouse. No single lump sum changes hands. Instead, the entitled spouse receives a share of each individual right, for example earnings points (Entgeltpunkte) in the state pension.

The family court identifies all rights held by both spouses on its own initiative. Each pension provider calculates the share of its right acquired during the marriage, in earnings points, a pension amount, or a capital value, and proposes the equalization value (Ausgleichswert), meaning the half share to be transferred (Section 5(1) and (3) VersAusglG). These proposals are not binding on the court, which sets the equalization value itself and then divides the rights in a court order (Beschluss).

The family court deals with pension rights equalization automatically as part of the divorce proceedings. The procedure at a glance:

1. The divorce petition is served on the other spouse, which fixes the end of the marriage period.
2. Both spouses disclose their pension rights, in Germany and abroad.
3. Each pension provider calculates the share acquired during the marriage and proposes an equalization value.
4. The family court checks the proposals, sets the equalization values, and orders internal or external division.
5. The pension providers carry out the division in their own systems.

The relevant period is the marriage period (Ehezeit) under Section 3(1) VersAusglG. It begins on the first day of the month in which the couple married and ends on the last day of the month before the divorce petition is served on the other spouse.

Rights acquired during this period are included (Section 3(2) VersAusglG) and valued as of the end of the marriage period (Section 5(2) VersAusglG). Later legal or factual changes that affect this value are also taken into account.

Both spouses must disclose their pension rights to each other under Section 4 VersAusglG. If a spouse refuses or cannot be reached, for example because they live abroad, the other spouse can request the information directly from the pension providers concerned (Section 4(2) VersAusglG). How long the procedure takes depends mainly on the number of pension rights involved and how quickly both spouses cooperate.

Under Section 9(2) VersAusglG, internal division is the rule. The entitled spouse receives an independent pension right with the same provider that holds the obligated spouse’s right. Under Section 10(1) VersAusglG, the court transfers a right equal to the equalization value from the obligated spouse’s account, and the provider records the transfer in its own system.

Internal division is the simpler route, because no transfers between providers are needed. Under Section 13 VersAusglG, however, providers may charge reasonable costs of division and offset them equally against both spouses’ rights. The amount actually transferred can therefore be slightly lower than an exact half, and both spouses’ later pensions are reduced slightly.

External division under Section 14 VersAusglG is only possible in specific cases set out in the Act. The entitled spouse’s share is then created not with the original provider but in a different pension scheme. This happens mainly in two situations: the entitled spouse and the obligated spouse’s provider agree to it, or the provider requests it and the equalization value does not exceed a statutory threshold. Civil servant pensions follow their own rule. The share is created in the state pension where the civil servant scheme does not offer internal division, and always for trainee civil servants (Beamtenverhältnis auf Widerruf) and soldiers serving a fixed term (Section 16 VersAusglG).

For company pensions paid directly by the employer or through a support fund, Section 17 VersAusglG allows the provider to demand external division up to a considerably higher limit, which is why external division is common with substantial company pensions. The entitled spouse can choose under Section 15(1) VersAusglG whether to top up an existing pension right or establish a new one with another provider. If no choice is made, the share goes into the state pension or, for company pensions, into the Versorgungsausgleichskasse, a pension fund set up specifically for this purpose.

External division often arises where the spouses followed a traditional division of roles. One spouse builds up a large company pension while the other looks after the home and children. The employer or pension provider may then demand external division, and the entitled spouse must invest their share with a different institution, which often applies less favorable interest and valuation assumptions.

The resulting transfer losses can leave the entitled spouse with a lower pension than the obligated spouse gave up, and lower than internal division would have produced. In its judgment of May 26, 2020 (1 BvL 5/18), the Federal Constitutional Court held that Section 17 VersAusglG is constitutional, but only if family courts prevent excessive transfer losses. The court noted that these losses fall mainly on women, which requires particularly weighty justification. The pension provider’s proposed value is not binding: the family court sets the amount itself and must increase it if no adequate pension can be established with it. The court found no constitutional objection to treating a shortfall of more than 10 percent compared with internal division as too much. If the adjusted amount is too costly for the employer, it can still choose internal division instead. Because the valuation methods are complex and depend heavily on interest rates, the court’s calculations should always be checked carefully in these cases.

The main differences between the two forms of division are:

For couples with ties to more than one country, two questions come first: whether pension rights equalization applies at all, and how foreign pension rights are handled.

Under Article 17(4) of the Introductory Act to the Civil Code (EGBGB), pension rights equalization follows the law that governs the divorce under the EU Rome III Regulation (Regulation (EU) No 1259/2010). For couples who both live in Germany, this is usually German law. Spouses can also choose the law that governs their divorce, but only from a limited list: the law of the country where they both live, the country where they last lived together if one of them still lives there, the country of either spouse’s nationality, or the law of the court hearing the divorce. This choice normally has to be made before the divorce is filed, and because it also decides whether pension rights equalization applies, it should not be made without advice.

Even where German law applies, German courts only carry out the procedure automatically if the law of at least one country whose nationality either spouse held when the divorce petition was served has a comparable procedure. In all other cases, either spouse can apply for it under German law. This requires that one of them acquired pension rights with a German provider during the marriage, and that dividing them is fair, particularly in view of both spouses’ financial circumstances throughout the marriage.

A German court cannot instruct a foreign pension provider to split a pension. Foreign rights, such as a UK workplace pension or a US 401(k), are therefore usually not divided in the divorce itself. They are classed as not yet ready for division (nicht ausgleichsreif) under Section 19 VersAusglG and reserved for claims after the divorce under Sections 20 to 26 VersAusglG (Ausgleichsansprüche nach der Scheidung).

The most common of these claims is an equalization pension paid by the other spouse once they draw the foreign pension. It becomes payable when the entitled spouse also draws a pension, reaches the standard retirement age, or becomes unable to work. Where it is reasonable for the other spouse, the entitled spouse can instead ask for a lump sum paid into a pension scheme of their choice. If the other spouse dies, the entitled spouse may have a claim against the widow or widower who receives a survivor’s benefit from the foreign provider.

Foreign pension rights can also affect the division of German rights. Under Section 19(3) VersAusglG, if one spouse holds foreign rights that cannot be divided in the divorce, the court will not divide the spouses’ other rights either, to the extent that doing so would be unfair to the other spouse. Foreign rights must therefore be disclosed in full, even if they will not be divided in the divorce itself.

It is worth requesting statements from foreign pension providers early, covering the whole marriage period. German is the language of the court, so foreign documents may need a certified German translation, and valuing foreign rights can call for an actuarial expert opinion, which adds time and cost.

A divorce granted abroad does not trigger pension rights equalization in Germany automatically. Either former spouse can apply for it afterward, provided one of them acquired German pension rights during the marriage. The application goes to the family court where a former spouse lives in Germany; if both live abroad, the Schöneberg Local Court (Amtsgericht Schöneberg) in Berlin has jurisdiction.

The application usually needs the marriage certificate, the foreign divorce decision with proof that it is final, and proof of when the divorce petition was served, together with certified German translations of any foreign documents. Proof of recognition of the foreign divorce is also required, unless the divorce was granted in an EU member state other than Denmark after March 1, 2001, or by a court of the spouses’ shared home country. Applicants living abroad should name a person in Germany who is authorized to receive court documents, which saves time and cost.

We regularly advise international clients on these questions in English, together with the recognition and enforcement of foreign family court rulings in Germany.

Pension rights equalization does not take place, or only in part, in five situations:

• Short marriage: If the marriage period lasted up to three years, the court only divides pension rights if a spouse applies for it (Section 3(3) VersAusglG).
• Exclusion by agreement: Spouses may exclude pension rights equalization in a prenuptial or postnuptial agreement, which must be notarized or recorded by the court (Section 7 VersAusglG). The court can still check whether the agreement is fair, both as written and as relied on at the time of divorce (Section 8(1) VersAusglG).
• Minor values: The court generally does not divide individual rights with a very small equalization value, or rights of the same type held by both spouses where the difference in value is small (Section 18 VersAusglG).
• Gross unfairness: The court may decline to divide pension rights if doing so would be grossly unfair in the individual case (Section 27 VersAusglG). The court looks closely at all the circumstances of the case.
• Rights that cannot yet be divided: Foreign pension rights and certain other rights are not divided in the divorce itself. They are settled later between the spouses under Sections 20 to 26 VersAusglG, for example through an equalization pension.

Whether one of these exceptions applies, in particular the hardship clause in Section 27 VersAusglG, depends on the specific facts. We assess this in an initial consultation.

The same problems arise again and again in practice, and early legal advice can usually prevent them:

• Incomplete or late disclosure of pension rights, especially rights acquired abroad, which must be disclosed even if they are settled after the divorce
• A missed or late application for equalization after a marriage of up to three years, even though significant pension rights exist
• An invalid exclusion in a prenuptial agreement, for example because it was not notarized or unfairly disadvantages one spouse
• Treating a company pension paid as a lump sum, or a life insurance policy with an annuity option, as outside pension rights equalization without checking its terms

We review your documents and tell you what needs to be done.

Pension rights equalization can be adjusted after the divorce if the entitled spouse would otherwise have a maintenance claim, if the obligated spouse draws an invalidity or special-age pension, or if the entitled spouse dies early. The decision itself can also be amended if the value of a right changes substantially. These rules apply only to rights in the state pension, civil servant pensions, professional pension funds, and comparable regular schemes, not to company or private pensions (Section 32 VersAusglG). Each adjustment takes effect from the month after the application, so it pays to apply promptly.

If the obligated spouse already receives a pension while the entitled spouse cannot yet draw on the right they received, the reduction can be suspended on application. This requires that the entitled spouse would otherwise have a statutory maintenance claim against the obligated spouse, and the suspension is limited to the amount of that claim. The family court decides (Sections 33 and 34 VersAusglG).

A similar suspension is available if the obligated spouse receives a pension because of invalidity or a special retirement age, as applies in some public service careers, but cannot yet draw benefits from any right they themselves received in the equalization. The pension provider decides (Sections 35 and 36 VersAusglG).

If the entitled spouse dies, the obligated spouse can apply to have the reduction lifted, provided the entitled spouse received benefits from the transferred right for no longer than 36 months. Any rights the obligated spouse received from the deceased spouse in the equalization then lapse, so the overall effect should be checked before applying. The pension provider decides (Sections 37 and 38 VersAusglG).

Separately, a decision on these same types of pension rights can be amended under Sections 225 and 226 of the Act on Proceedings in Family Matters (FamFG) if their value has changed substantially since the end of the marriage period for legal or factual reasons. Either spouse, their surviving dependents, or the pension provider concerned can apply. The application cannot be made more than twelve months before a pension from the right is expected to start, and any amendment only takes effect from the month after the application, so timing matters.

Spouses can exclude pension rights equalization or modify it by agreement, before or during the marriage, in a prenuptial or postnuptial agreement (Ehevertrag) or in a divorce settlement agreement (Scheidungsfolgenvereinbarung). Sections 6 to 8 VersAusglG set out the requirements.

The law allows spouses to exclude the equalization entirely or in part, include it in the wider settlement of their property, or reserve it for claims after the divorce (Section 6(1) VersAusglG). An agreement can only transfer or create pension rights if the scheme’s rules allow this and the provider consents (Section 8(2) VersAusglG). An agreement can also soften the effects of external division, for example by offsetting the spouses’ pension rights against each other instead.

Such agreements are only valid if notarized or recorded by the court during the divorce proceedings (Section 7 VersAusglG). The family court is bound by the agreement unless it finds that the agreement unfairly disadvantages one spouse, either as written or as relied on at the time of divorce. In that case, the agreement may be invalid in its entirety.

An early agreement is particularly advisable for business owners or couples with very different incomes, because it can prevent later disputes over the value of individual pension rights. If an existing prenuptial agreement is amended or canceled, any clause on pension rights equalization should also be reviewed.

At Schlun & Elseven Rechtsanwälte, our family law team advises on pension rights equalization at every stage, from drafting agreements before marriage and representation in divorce proceedings to amendment and appeal proceedings after a final decision. We check the equalization values that pension providers propose to the family court, identify valuation errors, calculate the expected outcome, and enforce our clients’ claims against the providers concerned. We also draft provisions on pension rights in prenuptial agreements and divorce settlement agreements, including the notarization process.

In international cases, we factor in the special rules on applicable law, foreign pension rights, and claims after the divorce. These cases include foreign pension schemes, a spouse living abroad, or a foreign divorce that has already been recognized in Germany. We also advise on whether you need to appear in court in person and, where a residence permit depends on the marriage, on how the divorce affects your residence status. Before you sign an agreement or accept a court decision, you will know what the equalization means for your retirement income in practice.

We advise in English, work fully remotely where needed, and act for clients from all over the world, always in strict confidence and with a transparent cost structure. Book an initial consultation by video call or at our offices in Cologne, Düsseldorf, or Aachen to assess your situation with one of our family lawyers.