Pension Rights Equalisation in Germany

In principle, pension claims in Germany relate to all entitlements and prospects for statutory and private pension claims, such as further entitlements to statutory pension insurance, civil servant pensions, professional or occupational pensions or pension entitlements from private old-age and individual pensions. In 2009, the legislator created a Pension Equalisation Act (VersAusglG) in Germany for pension equalisation, which is also referred to in Section 1587 German Civil Code (BGB).

To ensure that the spouses each receive an appropriate share of the pension entitlements acquired during the marriage after the divorce, the Federal Constitutional Court has derived a right to equal participation in the pension assets acquired during the marriage from Art. 6 para. 1 in conjunction with Art. 3 para. 2 of the German Constitution (GG). However, the spouses can agree to exclude pension equalisation in whole or in part or to include it in the division of assets. It can also be decided that entitlements from pension equalisation are offset against other assets. In some exceptional cases, pension equalisation can be excluded, e.g. if it appears grossly unfair. In such cases, however, it is a case-by-case decision that requires careful consideration.

In Germany, the family court is responsible for implementing pension rights equalisation. In principle, Section 1 VersAusglG stipulates that all entitlements acquired during the marriage are divided in half. The fact that this only concerns entitlements acquired during the marriage can be justified because a mutual pension community only exists between the spouses during the marriage. Which entitlements exist and in what amount they existed during the marriage must be determined at the end of the marriage per Section 5 para. 2 VersAusglG.

Both spouses are obliged to provide each other with information about entitlements acquired during the marriage (Section 4 VersAusglG) to ensure correct implementation. The German Pension Equalisation Act generally assumes an internal division of pension entitlements following Section 9 Para. 2 VersAusglG. This practice is only different if an external division has been agreed upon beforehand or if the pension provider of the person liable to equalisation demands an external division.

In the case of the internal division, the pension provider with whom the liable spouse has acquired entitlements or rights is also the pension provider with whom half of the internal division takes place. Thus, spouse A is granted the respective equalisation entitlements by the pension provider with whom spouse B has acquired entitlements. The competent family court in Germany issues a corresponding instruction. However, half of the crediting may be lower for the equalisation beneficiary due to costs incurred by the pension provider, Section 13 VersAusglG.

Internal pension equalisation is the rule for simplicity reasons. In the case of equalisation with only one insurance provider, the equalisation claims are offset and do not have to be transferred individually. With the external division of pension rights, on the other hand, equalisation takes place with different insurance providers.

There are, however, exceptions where pension equalisation does not take place:

• In cases where the marriage period has only lasted up to three years, pension equalisation does not occur. The situation is different if one spouse applies for pension equalisation under Section 3 para. 3 VersAusglG.
• The spouses have excluded pension equalisation in a marriage contract (prenuptial agreement). Such an agreement must be notarised per Section 7 VersAusglG and, under Section 8 (1) VersAusglG, be subject to a review of its content and exercise.
• In the case of insignificant equalisation values, according to Section 18 VersAusglG.
• If the pension equalisation would be grossly inequitable, according to Section 27 VersAusglG. Such gross inequity is always decided on a case-by-case basis, which the courts must weigh up legally.

In addition, pension equalisation can still be adjusted after it has been carried out by the family court. Such adjustments are allowed f there are maintenance claims  (Section 33, 34 VersAusglG), the person liable to equalise becomes disabled (Section 35, 36 VersAusglG) or if the person entitled to equalisation dies (Section 37, 38 VersAusglG).