During a divorce, and indeed afterwards, ex-partners often find themselves at loggerheads.
Phasing out self-administered pensions
This does not provide a sound basis for obtaining the consent of the (former) partner required in the context of the phasing out of self-administered pensions. That consent forms part of the tax regulations. There are no provisions for this under civil law. It is therefore not surprising that cases have already been brought before the courts.
Below, we discuss a ruling by the Amsterdam District Court. In this case, the court ordered the husband to cooperate. Please note that the specific circumstances of this case were decisive in this regard.
The phasing out of self-administered pensions also provides an opportunity to examine whether something that previously failed might now prove successful. The ruling by the District Court of East Brabant, set out below, is an example of this.
Stamping and converting approvals
At the Amsterdam District Court The case involved an ongoing divorce settlement. It concerns a case in which Ms X is the director and majority shareholder (DGA) of a private limited company (BV). She has accrued a self-administered pension within that company. She wishes to revalue this pension to an entitlement based on its tax value and subsequently convert that entitlement into a retirement obligation (ODV). Tax legislation requires her partner, Mr Y, to give his consent for this.
However, Y refuses to sign the form for the tax authorities. He believes he is better off keeping the pension, which will then be settled in accordance with the statutory provisions.
However, the Court rules that the principles of reasonableness and fairness require Y to give his consent to the pension adjustment and conversion. The pension adjustment increases the value of the shares. Y also shares in that increase in value. Furthermore, by refusing to cooperate, Y is depriving Mrs X of the opportunity to make use of a scheme established by the legislature. The Court also considers it significant that there is a funding shortfall. This must be apportioned between the spouses in proportion to their respective entitlements. Finally, it is important to note that, without making use of the tax options available, the dividend lock-in will persist, thereby hindering the settlement of the prenuptial agreement.
Conversion and turnover
At the East Brabant District Court This case concerns a situation in which the divorce took place several years ago. In this case, the ex-wife of the director and majority shareholder wishes to make use of the new tax rules. She is applying to the court to require her ex-husband (the director and majority shareholder, who has accrued his pension under a self-administered scheme) to cooperate with the following actions:
- conversion of the pension to be settled into an independent pension entitlement in her name;
- conversion of the converted entitlement into a retirement benefit obligation (RBO);
- payment of the amount relating to the ODV to a pension company established by it for that purpose.
The court ruled that the woman is entitled to demand that her share of the pension entitlement be secured by means of a lump-sum payment. This had not been done, but the woman’s entitlements had been secured by a 10-year bank guarantee.
However, the conversion of pension entitlements is not a right held by either spouse. She cannot, therefore, compel her ex-husband to cooperate in this matter.
The court has, however, ruled that the woman may still enforce payment of the lump sum required to cover her entitlements. A key factor in this is that the bank guarantee expires in December 2017. In addition, a substantial portion (90%) of the pension provision has been used to grant a mortgage loan. This leaves the woman uncertain as to whether the private limited company will be able to meet its pension obligations.