Pensions on Divorce

Is a pension taken into account in a divorce settlement?

• Yes, and it is important that the pensions are looked at carefully
• The family court looks at a number of principles for a financial settlement, to include 50/50 as a starting point.
• However, it is not uncommon for there to be a number of pensions in a divorce and not all of them will be the same.
• Extra care is needed where, for example, the pension is a final salary scheme, police or armed forces pension, where there are health issues or retirement is foreseeable.

What are the options for a pension on divorce?

There are usually 3 options:

• Pension sharing – here a percentage of one of the spouse’s pension is transferred into a pension in the other spouse’s name. It could be the same pension or a completely different one. This is the most common way a pension is dealt with in a divorce. It separates the pension benefits between the couple and achieves a pension clean break.
• Pension offsetting – this is where the spouse with the pension retains their pension benefits. The other spouse receives a share of the other assets (for example more of the family home or savings) in lieu. Sometimes it is possible to do a partial pension share and partial offset of the pension claims, so you can mix the two.
• Pension attachment – this is perhaps the least common and means that part of the pension lump sum or income is paid to the other spouse when the pension owner retires, and based on values at that time. The downside is that it is potentially uncertain and does not achieve a clean break plus much depends on when the spouse with pension decides to retire.

Each case is different, and it is important that you seek specialist family law advice from a solicitor bout your pension options on divorce. It is vital too that the true value of the pension benefits are looked at properly and a IFA and/or pension actuary can help with a report which will deal with the relevant circumstances of your individual case. This will help you and your solicitor make an informed decision about how you wish the pension to be taken into account.
 

How do I get my pension share?

First of all, you will need a final divorce and a pension sharing order from the court as part of your financial settlement.

Your pension share can then be implemented, and it can be important not too delay. Your divorce solicitor can advise you about how to prepare a consent order, to include your pension options and how this must be implemented. It is also a good idea that you also seek independent financial advice about what you do with your pension share on divorce.