Divorce and my Pension
15th Mar 2018
Whilst retirement may seem a long way off, if you are going through divorce proceedings, apart from the family home a pension may well be the biggest asset of the marriage. It is also a resource that will be lost to one party following divorce, if it is not considered as part of a financial settlement.
I recently successfully negotiated a financial settlement for a client regarding their pension. The client and his wife had been separated for a good number of years and the wife’s solicitor was adamant that the current pension value should be used for the calculation and it should not be discounted for the years of separation.
As the client was fortunate enough to have the benefit of a very secure, final salary scheme, this would mean his former wife would have access to a much larger proportion of the pension than might otherwise be the case.
Our client was delighted that after negotiations, a settlement was ultimately reached based on the value at the time of the parties’ separation, thus ensuring the client had a more secure pension for the future.
Taking legal advice at the early stages of any separation is crucial to help lay out your financial plans for the future – a pension is a critical aspect of this planning.
When you initially consult us we will ask you, as part of full and frank financial disclosure following separation, to obtain a Cash Equivalent Transfer Value (CETV for short) for your pension(s).
There are several different types of pension schemes, these include occupational final salary related pensions; occupational money purchase schemes; personal pension schemes and the state scheme (only the additional state pension can be shared).
Once the value is known, the figure is considered together with the value of the other assets and liabilities.
There are no hard and fast rules as to how the pensions will be assessed by the Court. A starting point is that you would each be entitled to 50% of the other’s pension that has accrued over the course of the marriage (to include any pre-marriage cohabitation). All the circumstances of your case will need to be considered.
There are 3 options to consider when we look at pensions on divorce or dissolution of a civil partnership:-
This is where one spouse would retain more of the other assets of the marriage in lieu of making a claim to your pension. For example one of you would retain more of the sale proceeds or equity in a house and not make a claim against the others pension.
This is an order requiring a percentage of the lump sum and/or pension income to be paid to your spouse by the pension provider at the time of your retirement. It would apply to the value of the pension as at the date of retirement.
This is where a percentage of your pension is transferred to your spouse. It offers a clean break now and your spouse would have a pension in their own name.
Pensions are a very complicated area. At Rogers & Norton we have the skills and knowledge to support and advise you, through what can be an extremely difficult period, to ensure you achieve the best outcome. We have strong working relationships with both actuaries and financial planners, who have the technical skills to fully understand the current value of the pensions and what it will be worth in the future.
If you wish further advice on this difficult area please contact one of our family law solicitors:
Kerry Rowell on 01603 675666 or firstname.lastname@example.org
Averil Ballam on 01953 458165 or email@example.com