Pensions on Divorce Experts Sheffield, York & Leeds: Pension Division Settlements Following Separation
Pensions regularly form a very significant financial asset or assets that should be considered as part of a financial settlement as part of a divorce, but many divorcing couples fail to think about pensions or take appropriate advice on how they should be treated as part of their divorce settlement.
Pensions come in many different forms, with different benefits and options on retirement. Our family lawyers understand that pensions can be confusing so we take the time to help you understand what pension benefits you have and how important it is for you to get issues around pensions right as part of any divorce settlement. We also have strong relationships with financial and pension experts who can provide specialist advice where needed.
What could happen to my pension on divorce?
The starting point is to ask your pension providers to provide a Cash Equivalent Transfer Value (CETV) for any pension provision that you have. Your spouse will also need to provide the same details for all of their pensions. Our lawyers can then advise you on the appropriate course of action.
Pensions form part of the matrimonial asset pot and the same factors that are considered for how distributing other assets should be applied. For more information read our page on Resolving Money Issues After a Divorce. Factors such as the ages of the parties, the length of the marriage and whether contributions were made to pensions prior to the marriage are commonly impact on how pensions should be treated.
Leave Pensions as they are
if pensions are of a similar value or minimal value then it may be appropriate for each spouse to retain their own pension(s).
If there is a disparity in pension provision between the parties, one option would be to “offset” that amount by the spouse with the smaller pension provision receiving more of the capital (for example, from the proceeds of sale of a property) than the other spouse to compensate for the difference in pensions. If this is considered then it is important to take expert advice on how to calculate the appropriate amount.
This option allows for a proportion of one spouses pension to be transferred to a pension in the other spouses name. The big advantage of this option is that each spouse is left with their own pension provision, independent of the other spouse. It is important to take advice in relation to the percentage of the pension that should be transferred and also on where the pension credit should go.
Pension Attachment or Earmarking
The court can order the trustees responsible for the pension to make payments directly to the pensioner’s spouse as and when such payments are due on retirement. This option is rarely used as the pension benefits remain in the name of the pensioner and therefore benefits would cease on the death of the pensioner.