Pensions in divorce

Pensions can be a big asset, sometimes the biggest asset, for divorcing couples and couples dissolving their Civil Partnerships. However, many couples do not sufficiently consider the impact the end of the relationship will have upon their pension provision and resulting financial position on retirement.

It is worth taking the time to find out how workplace, personal and additional state pensions can be divided. Each pension scheme has different rules and benefits and it is not always as simple as looking at the respective Cash Equivalent Values (CETVs) of pensions. Final salary or career average schemes can be particularly complicated and the CETVs may not be an accurate reflection of their value and the benefits they provide.

There are three main options available to the Court:

Offsetting: The value of the pension is offset against another asset or assets. For example, a spouse may receive the entire equity in the matrimonial home in return for the other spouse retaining the entirety of his or her pension.

Attachment: A percentage of one spouse’s pension is identified as the other spouse’s and will be paid upon the member’s retirement. However, when the member spouse dies the fund is lost to the other spouse. This is also the case if the receiving spouse remarries.

Pension Sharing: Pension sharing provides for the immediate division of the pension into two separate pots, each individually owned.

The pension company will require a Court Order if there is to be a Pension Share or Attachment; the couple cannot simply ask the company to implement their agreement.

With recent changes to pensions giving more options to the holders of defined contribution pension schemes, it is an important but complicated area and expert help from solicitors should be sought.

If you would like to discuss this or your situation generally, please contact a member of our Family team.

Back to index