It’s all about the total picture
Richard Renckens has been an IBM employee for more than 15 years. He started back then in the IBM Global Finance department in the Operations team. He now works at IBM TSS (Technical Support Services), where he sells support services for software not developed by IBM. So his career is going well. But small cracks appeared in Richard’s private life. About 5 years ago, his marriage broke up. What did that divorce mean for his retirement? ‘Some things had to be arranged. Not only for my pension by the way, you also have to look at other financial aspects. It’s about the total picture.”
You should work with your ex-partner to find the best solution.
‘When I was at the beginning of my career and had just started at IBM, I looked at the pension plan. I had studied for quite a long time, so I started building a pension late. Fortunately, I heard from everyone that IBM had a very good pension plan. When it came to my pension, I didn’t have to worry. Nor did I. In fact, I no longer paid any attention to my pension at all. Not even when I got into a relationship.
That changed when we had plans for children. A good time to take another look at that retirement plan, I thought. This made me realize that it would make sense for us to officially record our relationship after all. Otherwise my partner might not be entitled to a partner’s pension after my death.
When children came along I started looking into retirement again
‘At that time we didn’t have enough money to get married. That’s why we opted for a registered partnership; that gives you the same pension rights as a marriage. What was funny: on the form we had to fill out in 2007, you could not yet indicate that you had opted for a registered partnership. There was no box for that yet! A few years later, we got married after all.
But so it was a period when I was pretty intense with my retirement. I also talked a lot about it with colleagues. During those conversations I noticed that many colleagues were not thinking about retirement at all. Even if they lived together unmarried and had children. You could call that naive, or irresponsible. Yet there were also colleagues with managerial positions so with great responsibilities.’
You’re young, you get a relationship and kids. Then you’re not so quick to think about retirement
‘I do understand that behavior. You are busy with the future. All the positive changes in your life: relationship, children, new house. You don’t think about the fact that your relationship could also end. Nor that you might have to make arrangements for it, for example for your pension. You only think about the wonderful future that lies ahead of you!
That’s why I’m glad I had those conversations with colleagues. I believe I opened the eyes of some of them in time. Because you don’t build up pensions just for yourself.’
Divorce has big implications for your pension. Find the best solution together with your ex-partner
“My wife and I were also working hard on the future. And yet 3 years ago things went wrong; we no longer matched. I knew by now that a divorce would have consequences for my pension. Your ex-partner is automatically entitled to half of the pension you built up during the partnership or marriage. That pension would only start when I retired. I was entitled to half of her pension, because my wife also built up a pension of her own. I also already knew that we could make other arrangements. For example, a separate pension for my ex-partner, where my retirement date no longer plays a role at all. A third possibility is to renounce each other’s pension. That’s what my ex-partner and I opted for.
Look very carefully at the overall financial picture!
‘In fact, we had been thinking about life after retirement for some time. What does that look like financially?
So what are our income and expenses? In those calculations, we included everything. So not only the pension I accrued with SPIN, but also my partner’s pension. And other financial matters, such as the mortgage on our house. That is partly based on shares, so for my DC pension I wanted to take less risk. Fortunately, that is possible with SPIN. I also have a partial DB pension.
Many other issues come into play in a divorce. Do we sell the house, or will either of us continue to live there? How much is the house worth? Is it under water? Are there any other monies besides the pension pot? Does one of the partners need start-up capital rather than money in the future? Then it’s a matter of give and take. What is the solution that both parties can live with? So for us, that was waiving each other’s pensions. There was no financial need to divide the pension.
So my ex and I both keep our own accrued pension. But for someone else, dividing the pension may be just the best solution. Especially if one of us has ‘sacrificed’ his or her career in order to be home more often for the children. Finding the right solution is always a shared responsibility. This all sounds very rational, but of course emotions can run high during a divorce!
SPIN does everything according to the rules, without being bureaucratic
“That’s why it was great that SPIN guided us well. The pension fund follows the rules; they are laid down by law. But SPIN is not bureaucratic. The employees think in terms of solutions, which was very pleasant. And also necessary, because our divorce agreement contained a mistake. Fortunately we were able to solve that quickly.
Especially to my younger colleagues, I would say: think about your financial future, including retirement, in good time. Especially if children are involved. And also take less pleasant things into account, such as a divorce. Because the end of your marriage can have enormous consequences for your pension. So seek timely advice in the event of a divorce.
SPIN has all the retirement knowledge needed!
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