Pensions


Usually, a pension is a significant asset in a family.  However, the value of a pension is not like cash and thus has to be treated very differently.

Pensions are extremely complex and unusual assets and it is advisable to obtain an expert’s opinion as to how the asset should be divided upon divorce.  Legal representatives are not qualified to provide advice in this area.

The first step is for each party to obtain a Cash Equivalent Value for each of their pensions, a forecast for their State Pension and a value for any additional State Pension.

The expert will confirm whether these figures look correct and will raise any questions upon values or benefits if necessary.

There are various ways in which a private pension can be split on divorce including : –

  • Sharing

A percentage of your spouse’s pension(s) is transferred to you.  This percentage can either remain with the original scheme but in a ‘pot’ set up specifically for you which has no link to the other party or can be transferred to a scheme of your own choosing.

  • Attachment

Part or all of the pension payment will be directed to you from the other person’s pension.  Given that they retain the pension fund, it will die with them and therefore is rarely used.

  • Offsetting

Rather than take a percentage of a pension, you can take a share of another asset in lieu of the pension.  Please remember however, that a pension pound is not the same as a cash pound and therefore expert advice is crucial if you choose this option.

The tax-free lump sum element of the pension will also be addressed.

A State Pension cannot be shared but it can be factored into the situation should an expert is engaged.  The additional part of the pension can be shared between parties upon divorce, and again the expert will be able to provide an opinion as to the amount which should be shared.

In addition to the expert input mentioned, you should take financial advice before making any decisions like this.

For anything further, one of our specialists would be delighted to meet you to talk through your options and answer any questions. Please contact us at any time.