Divorce & Pensions
When addressing financial matters in a divorce or the dissolution of a civil partnership, it is important to remember that pensions are considered part of the shared assets and can often form quite a significant share of “the pot”. It is therefore vital to include pensions in any discussions about finances during your divorce.
Valuing Pensions in Divorce
To do this you need to know how much any existing pension(s) are worth, by asking the pension provider for a cash equivalent transfer value (CETV). It is important to note that pensions are not the same type of asset as cash, and in most cases, it is not as simple as adding up all pensions and dividing them by two to work out how much each person should receive.
For this reason, a ‘pension on divorce expert’ (PODE) is sometimes instructed to assist with these calculations. Many factors need to be taken into account when dividing pensions, not least whether they are defined contribution or defined benefit (final salary) pensions.
There are also different ways that a pension can be divided between parties to accommodate various circumstances; for example, one person may receive more capital from the family home in return for the other person retaining more of their pension (this is known as “offsetting”).
Many people believe that as a pension has been accumulated by one person it does not form part of the matrimonial assets and this is not the case. The Court will not financially penalise a person for not working and thus not contributing to a pension fund, particularly in circumstances where, for example, one parent may have given up work to care for the children of the family.
What Orders can the Court make about pensions?
- Pension Sharing Order – If a pension sharing order is made, this allows the Court to divide a pension between spouses by giving a percentage of one person’s pension to the other. This will be transferred to either an existing or new pension in that person’s name. This allows for a clean break and means that each person’s pension remains entirely separate, eliminating any future issues or claims.
- Pension Attachment Order – A pension attachment order provides for a percentage of one person’s pension to be paid to the other, once it becomes payable to the original holder of the pension. This is therefore similar to maintenance payments. This means that once the original pension holder starts receiving their pension, a specified amount will be paid to the other spouse. This continues until either the receiving spouse remarries or the original pension holder dies.
How we can help
Pensions are often overlooked by divorcing couples but can be of significant value, particularly in cases where there has been a long relationship. Sorting out finances after divorce or the dissolution of a civil partnership can be complex, and you should take expert legal advice to protect your interests.
Sterling de Zuk specialises in financial settlements and can offer legal advice to individuals throughout Cheshire. If your relationship has come to an end, we would encourage you to get in touch as soon as possible so that your financial situation can be assessed thoroughly.
Contact Mark Thomson on email: mark@zukdivorce.co.uk or phone: 0333 070 5651