If you and your partner are going through a divorce it can be a difficult time to talk about finances, so it’s good to have a clear understanding about what options are available when you do finally discuss what to do with your pensions. And alongside the former matrimonial home, your pension is often the most valuable of your financial assets .There are three different options to consider when you and your partner divide your assets following divorce and choose to settle your pension rights.
A divorcing couple can chose:
– Pension offsetting – which means offsetting the value of the pension rights against another asset such as the matrimonial home. If you choose to do this, you could keep your pension intact
– Pension earmarking – a formal court order where a mutual arrangement is made so that when the pension payment for party A comes through, a portion is paid to party B by the pension fund
– Pension sharing – a formal court order where the pension is split at the time of divorce and a percentage of the pension fund is given to the other spouse. This can be either by way of them becoming a member of the existing pension scheme or transferring their benefits out of the scheme to another pension. It will depend on the scheme rules.
Before you decide which option to go with, you will need to work out how much both you and your former spouse’s pensions are worth. To do this you need to ask your pension provided for a valuation of your pension known as the Cash Equivalent valuation.
Divorce and your pension entitlement – what you need to be aware of:
You will need to have an understanding of pension offsetting, earmarking and sharing so that you know the implications of each of these methods when going ahead with a divorce settlement.
If you are transferring from a final salary or a career average scheme, it’s worth realising that there could be a number of risks involved and you should consider taking independent financial advice so that you know you’re getting value for money and also so that you have a clear idea of what you want from the divorce financially.
The Court has to take into consideration any pension plans that your former spouse and yourself are paying into, as well as any which are currently providing you with an income or have been frozen in the past.
Last, but certainly not least, you need to make sure that you appoint a divorce solicitor who really understands pension entitlement and that applies to divorce. In particular, getting the right valuation of your pension could prove absolutely critical. Depending on your particular circumstances, it may be very important that you don’t rely on the valuation provided by the pension company itself – in which case you may need to obtain an independent valuation by a qualified actuary – this is something our team do regularly and can help you arrange.
Divorce and your pension entitlement – the need for specialist legal advice
if you are getting divorced, don’t leave your pension entitlement to chance. Call our specialist divorce and pensions solicitors today – not only is your initial phone call, [which can be outside office hours], absolutely free, but our team also offer a free half hour appointment on any aspect of divorce and family law.
Call us today or email us at advice@the–divorce-solicitors.co.uk