Divorce is always a tiresome process. This is also true for pension funds, who face the implementation of a highly complex rule. Despite the fact that the new divorce law has been in force since 1 January 2017, it is worth revisiting once more to examine the new requirements.
The principle of an equal split of the vested benefits acquired during the marriage remains unchanged. Of course, the divorce court can always diverge from this principle. Persons in a civil union are now treated the same as married couples.
As auditor of pension funds, our first experience under the new divorce law shows that annuities for divorcés/divorcées are rare – just as expected. At the same time, the implementation is highly complex and runs a significant error risk. We also found that lawyers and divorce courts are not quite up to speed on certain aspects regarding the new divorce law. It is therefore in the interest of the pension fund to closely monitor this aspect.
A serious challenge also arises from the presentation of the new divorce law in annual financial statements under FER 26. There are no explicit solutions in FER 26 for this situation. KPMG’s Competence Center Pension Funds has therefore worked out a recommendation on how the new transaction types may be presented in financial statements under FER 26.
The new divorce law, in force since 1 January 2017, meant that regulations, processes, controls as well as technical systems and financial accounting had to be adjusted or may still have to be adjusted in individual cases. Moreover, pension funds should also think about how they can present the already existing new types of transactions in the annual financial statements appropriately and in a manner adequate for the balance-sheet reader.
New Divorce Law Questionnaire (PDF, in German)