Pension sharing on divorce is often one of the most significant, and often misunderstood, aspects of a financial settlement, especially where one or both spouses have built up substantial retirement savings.
At Johnson Astills, our family law team regularly advises clients on how pensions fit into the wider picture of their divorce or civil partnership dissolution, from straightforward cases to complex, high value matters involving multiple schemes or international assets. If you need advice or support, we are ready and waiting to offer the guidance you need.
Please call us free now on 0800 059 0600 or complete a Free Online Enquiry and a member of the team will get back to you soon.
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Why Pensions Matter In Divorce
For many couples, particularly older ones, the pension pot is second only to the family home in terms of value. In some cases, the pension pot is the largest asset overall. Ignoring pensions can leave one spouse, often the lower earner or main carer for children, at real risk of financial insecurity in later life.
When the Family Court looks at finances on divorce, it considers all assets, including pensions, before deciding on a fair outcome. This applies whether the pension was built up before or during the marriage, although the way the court treats pre marital contributions can vary depending on the facts of the case and each party’s needs.
What Happens To Pensions On Divorce?
There are three main ways pensions can be taken into account in a divorce settlement. They are as follows:
Pension Sharing
Pension sharing involves part of one spouse’s pension being transferred into a pension in the other spouse’s name. This option gives each person their own retirement fund and helps to achieve a clean break for the couple.
Pension Offsetting
Pension offsetting is where the value of the pension is ‘offset’ against other assets. For example, one spouse might take more of the house value instead of a share of the other’s pension.
Pension Attachment
Pension attachment involves part of a future pension income being paid directly to the ex spouse when the pension comes into payment. This option does not achieve a clean break, since there remains financial dependence between the couple.
For many couples, pension sharing on divorce is the best option because it allows each party to manage their own retirement planning after their divorce.
What Is A Pension Sharing Order?
A Pension Sharing Order is a type of court order that sets out how a pension will be divided between divorcing spouses or separating civil partners.
Most private pensions can be shared, but most state pension rights cannot. The spouse who receives a pension share will normally either become a member of the original scheme in their own right or transfer the credit to a different pension arrangement in their own name.
How Do You Obtain A Pension Sharing Order?
Pension sharing can be agreed between you and your ex-partner as part of a wider financial settlement. if you are unable to reach an agreement, you can ask the court to intervene and make a Pension Sharing Order.
Before pension sharing on divorce can be finalised, whether through negotiation or court proceedings, the parties must give full financial disclosure of their financial positions. This involves providing details of all their assets, including up to date pension valuations from each scheme provider. In particularly complex cases where the stakes are high, a specialist pensions on divorce expert may be instructed to advise on fair ways to divide the benefits.
Once the parties are in receipt of all relevant information, their legal advisors will seek to negotiate a settlement. At Johnson Astills, we firmly believe that the issues arising from a divorce are best resolved amicably wherever possible, to minimise the time and costs our clients spend on the process. We have a proven track record of securing excellent financial settlements for our clients without the need for them to attend court. When agreement is reached, we will prepare a financial consent order detailing the terms, which we will send to the court to be made into an order that is binding on the parties. The court will usually approve an order provided it is fair in all the circumstances.
If a settlement is not forthcoming, the parties can apply to the court. The Judge will consider all the information and make a Pension Sharing Order or other order it considers fair.
How Can We Help?
At Johnson Astills, our family law solicitors have helped countless clients to obtain favourable financial settlements following a divorce or civil partnership dissolution. So, if you are going through a separation or considering starting divorce proceedings and are unsure how your pensions might be treated, get in touch today. We offer straightforward legal advice with a personal touch, and we will support you through the process from start to finish.
Please call us free now on 0800 059 0600 or complete a Free Online Enquiry and a member of the team will get back to you soon.
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