Pensions Advice on Divorce

After the matrimonial home, a pension fund is often the largest asset owned by a family and it is therefore crucial that you obtain good independent financial advice in this area. Since 1st December 2000 the courts have had wider powers on dealing with pension rights, this has been good news for women or men who have not had pensions of their own but have relied upon the pension provision of the husband.

For divorce purposes pension funds are usually valued using the transfer value available at the time of divorce and the benefits are normally offset, earmarked or shared as explained below :

Offsetting

The pension fund is traded against other assets to give each partner fair value in the split. This can be a problem when a pension fund is more valuable than the other assets.

Earmarking

A proportion of the pension fund is “earmarked” to go to the other party, normally in the form of a pension in retirement. This system is normally only used nowadays when a pension is already in payment. The problem with earmarking is that the original member of the scheme remains in control meaning that they decide on retirement age, investment strategy etc. and can possibly do so to the detriment of the ex spouse.

Sharing

Since December 2000 courts have been allowed to share the funds thus providing a clean break for divorcing couples and this has become the preferred choice for most people. The court makes a sharing order which provides the ex spouse with a pension credit and the original scheme member with a debit. The credit can in some circumstances remain in the scheme as a special scheme member but in most cases people are keen to transfer their credit into a plan in their own name in order to obtain financial independence.

How can we help?

We can provide you with independent financial advice which can enable you to fully understand your own and your ex spouses pension funds. This is critical so that any splt can be equitably carried out.

Once the sharing order has been issued we can help you split your pension and outline the best stand alone plan for your individual situation.

Enquire Now