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Looking for a pension divorce settlement?

Did you know that pensions can be shared on divorce or the ending of a civil partnership?  Just like other valuable items, such as your savings or the family home, pensions are treated as assets.

However, during divorce proceedings, couples will often focus on the more tangible areas first, such as childcare or where family members will live; meaning financial arrangements, especially any pension divorce settlement can be overlooked.

Each and every circumstance is different, so our friendly team of divorce pension advice solicitors in Stafford and Telford are here to help ease the burden during this stressful time. 

Our service includes:

  • Helping you navigate pension calculations, alongside your financial advisor. to define what your pension(s) are worth
  • Ensuring your pensions are shared fairly on divorce
  • Navigating disputes and helping alleviate concerns about the correct and fair sharing of assets.  

What are the rules around a pension divorce settlement?

After your home, your pension and that of your partner is usually the second most valuable asset in a marriage.  While a pension pot is not immediately accessible, like the cash you have saved together, it is viewed in law as a joint asset and therefore must be shared fairly between both parties.

A pension can only be in one person’s name, meaning couples often mistake it as belonging solely to that partner. This is particularly the case if one partner has paid into their pension pot over a long period of time.  However, in the eyes of the law, a pension is treated as part of the overall matrimonial finances, regardless of whether one partner has been the main earner, and has therefore had the opportunity to make higher pension contributions, and the other has taken more responsibility for the care of children or the family home.

What should I consider about a divorce pension?

Pensions on divorce is a complex area.  There are a multitude of different pension types, such as a final salary or defined benefit scheme for example, and it will require the help of a specialist solicitor, alongside a qualified pensions’ expert, to help define their exact worth.

It is often the case that pension divorce settlement is given more attention by the couple if they are ending the marriage later in life.  The closer you are to retirement, naturally, the more important the pension fund becomes, so it is vital to ensure that you and your ex-partner have made adequate financial provisions for your future during the settlement.

However, younger couples that are divorcing should also consider their pension on divorce as part of the overall matrimonial pot, even if the fund is relatively small.

Couples also tend to underestimate the time it can take to organise pensions when they decide to divorce and worry that this time will translate into more legal costs. Providing your ex-partner with your full financial details can help to make the process run much smoother and help minimise both time and expense.

How does a pension get divided on divorce?

There are a multitude of different methods by which your pension on divorce may be divided and the options will depend both on the type of scheme you have paid into, as well as your own circumstances.  Options can include:

  • Pension offsetting

Rather than the pension being divided between partners, it is offset against the value of other assets, so that the ‘value’ is balanced out… This may mean that one partner is allowed a larger share of the family home or savings, instead of an equal proportion of the available pension, which remains intact.

  • Deferred pension sharing

Under a court order, couples have the option to share the pension at a later date. This is often used where one partner is older than the other and already drawing his/her pension until the younger partner reaches retirement.  

  • Pension sharing order

In the scenario, the pension is split into agreed percentages on divorce, defined by the court. This gives each partner more autonomy, enabling the receiving spouse to set up his/her own pension fund and is one of the more popular options in the UK.

  • Deferred lump sum

A deferred lump sum is agreed through the courts and sees one partner agreeing to pay a percentage of this pension lump sum to his/her ex-partner on retirement.  

  • Pension attachment or earmarking

A pension attachment (also known as ‘pensions earmarking’ in Scotland), sees the agreed proportion paid out when the former spouse or civil partner starts drawing his/her pension, usually from age 55.

Next steps…

Our family law solicitors are here to support and provide divorce pension advice in Stafford and Telford. If you wish to discuss your financial situation, we offer a FREE 30-minute consultation. Get in touch with us or call on: 01785 223440