Divorce – don’t forget the pension

New research from Aviva suggests that approximately 34 % of people made no claim on their former partner’s pension during divorce and therefore it was not included as an asset in the financial settlement.  Further, 8% of divorcees say they did not have their own pension savings as they were relying on their partner to finance their retirement.

Due to the above approximately 19% of people indicated they will be, or are already, worse off in retirement.

Due to the above it is critical that, as part of the separation process, that couples take their time to think about and discuss one of their single most valuable assets, their pension. Our divorce solicitors Liverpool are able to assist you with this.

Pensions are specialist, tax efficient investment vehicles that are designed to

produce an income when you retire.  The valuations provided of pensions are sometimes a poor reflection of the benefits that the scheme will provide, and some schemes have valuable benefits that would be lost upon transfer. Further, the value of a pension fund and the income it produces upon retirement are two very distinct matters.

Pensions are able to be shared between the parties, attached or offset against other matrimonial assets.

Pension Sharing

Usually, all pensions including state pensions are taken into account when calculating an appropriate percentage share. It is sometimes appropriate to instruct a pension actuary to assist with calculating an appropriate pension share.  This is usually the case where there are large and multiple pension schemes.

It is possible to exclude pensions that were built up prior to the date of the

marriage.

The general position is that the person with the larger pension(s) will share some of their pension(s) with the person who has less by way of pension benefits.

Pension Attachment

This is another option for taking an interest in a spouse’s pension. A pension attachment (or earmarking order) redirects part or all of the member’s pension benefits to the ex-spouse or civil partner when it comes to be paid. This option can cause problems if the party sharing their pension decides not to take the income from the pension until the age of 75, for example. This option doesn’t provide a clean break, which most people seek to achieve.

Pension Offsetting

This is a way to take other assets instead of touching a spouse’s pension.

The difficulty with pension offsetting is that there is no widely accepted way of calculating what is a fair sum offset. The High Courts have stated that one pound in a pension fund is not worth one pound in savings. However, it is possible to appoint a pension actuary or an independent financial advisor as a single joint expert. This means that the expert is asked to provide a report to the Court or to the parties about pension distribution

If you want to speak to our divorce solicitors Liverpool then get in touch with our family solicitors who can assist you.

Please call us on 0151 236 1234, request a call back at your convenience or email us your enquiry.