The time has come! The indexation rate set by the Ministry of Justice and Security for partner and child maintenance is known. It is essential for both alimony payers and recipients to be aware of the legal indexation of alimony obligations. After all, it gives insight into the financial situation for the coming year. All alimony amounts will be increased by this percentage from 1 January 2024, unless other agreements have been made. And don't be alarmed, the indexation rate for 2024 is a whopping 6.2%. The last time the indexation rate was this high was in 1983 ( 6.4%). Such a high indexation rate can have quite an impact on your spending power. Many will be curious to know if there are options to do something about this.
What is statutory indexation?
Statutory indexation is a mechanism that ensures that alimony amounts are adjusted annually to reflect increases in the cost of living. It is meant to compensate for those increased costs. This adjustment is based on the price index figure for family consumption, as set by Statistics Netherlands (CBS) in the Netherlands.
The purpose of statutory indexation is to ensure that the purchasing power of alimony recipients is maintained in line with general economic developments. It prevents alimony amounts from failing to keep up with prices rising due to inflation. In this way, the financial situation of the maintenance recipient remains stable as far as possible.
How is the indexation calculated?
Indexation is automatically determined annually based on the price index figure for family consumption and announced by the Ministry of Justice and Security. Judges do not have to make a separate decision on this; it is a statutory automatic adjustment. The percentages are usually announced in November of the previous year and apply from 1 January of the following year.
Importance of awareness:
It is very important that both maintenance obligors and beneficiaries are aware of the statutory indexation and apply it annually. Failure to comply with indexation can lead to legal disputes and unnecessary complications. For alimony obligors, statutory indexation means that they have to increase the alimony amount annually by the established percentage. For alimony payers, this means that they can expect their received amount to grow along with general cost increases.
What can the alimony payer do against this legal increase?
According to Article 1:401 of the Civil Code, a party can file a request to change the alimony amount if there has been a substantial change in circumstances since the last judgment. This change must be such that the alimony amount no longer meets the legal standards. While a high indexation rate by itself will usually not be sufficient to force a reduction of the alimony obligation under this provision of the law, it can have an indirect impact on the financial situation of both the alimony obligor and entitled party. In some cases, a significantly high indexation rate may result in a heavier financial burden for the maintenance obligor, which could justify a long-term change of circumstances. For example, while the indexation in recent years has perhaps been problematic for some time although the rates were around 3%, the current rate of 6.2% may be the proverbial straw that breaks the camel's back.
Change of circumstances
It is also valuable to highlight any other changes in circumstances in conjunction with annual indexation. Changes in circumstances can range from a decrease in the maintenance obligor's income to an increase in the maintenance recipient's financial needs. Changes in the family situation, such as the birth of new children, can also be considered relevant circumstances. However, one should realise that not every change of circumstances is a change within the meaning of article 1:401 paragraph 1 of the Civil Code. It has to be a legally relevant change that makes the earlier maintenance award or maintenance agreement no longer meet the legal requirements. It is irrelevant whether these circumstances were foreseeable or known when the original alimony amount was determined. All that matters is whether those circumstances were taken into account in such a way that they must be deemed to have formed the basis for the determination of the contribution. Together with a specialised family law lawyer, you can investigate in your specific situation whether there is a relevant change of circumstances that, on its own or in conjunction with the statutory indexation, is reason to come to a reduction of the maintenance obligation.
While statutory indexation ensures annual adjustments of alimony amounts based on inflation, Article 1:401 of the Civil Code provides a legal framework for situations where changes in the circumstances of alimony obligors and alimony creditors justify a revision. A specialised family law lawyer plays a key role in advising on the feasibility of such requests and guide them through the process of bringing about a modification. This can be done through mediation or using another a consultative situation with the maintenance creditor, but if consultation is really not possible, it can also be done by initiating court proceedings. Do you have questions or need advice? Then contact specialised family law lawyer Angelique van den Eshoff or Marion van Acker of SPEE advocaten & mediation.