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14 Sep 2023

Divorce

Family & Matrimonial

What happens to my pension when I divorce?

If you are coming to the end of your marriage or civil partnership, it is important not to overlook pensions. Leah Thomas from our expert Family team explains what the law says on pension sharing.

We know that divorce is one of the most stressful and painful times people can go through. Adding pensions into the mix can be daunting but neglecting it can be a huge mistake.

It is important to understand that pensions are an asset in the same way as your house or other savings. In many cases, the personal or workplace pensions of you and your partner will be the most valuable asset you have but are also the most overlooked.

Pensions can be divided between you and your spouse or civil partner in the event of a divorce. This might not necessarily happen, particularly if you both have similar amounts invested in pension funds.

However, if one partner has built up a significant amount in their fund but the other has stayed at home to look after the children, then your solicitor will be able to help you understand the best method of making sure this asset is split fairly between you.

How will a pension be divided?

If a pension is to be divided, your pension provider will be able to give an up-to-date value for the fund. You will always be advised to obtain expert advice from a pensions on divorce expert as to the best outcome, as part of the wider financial settlement.  Pensions should be treated separately from other assets because they are such a distinct financial asset.  A pension expert and your solicitor will work together to ensure you know the best options for you.

Pension Sharing Order

An agreed percentage of one spouse’s pension funds are transferred into a pension fund in the other spouse’s name. This option gives a clean break between the couple and enables both parties to build up their pension funds independently after the original pension sharing order is implemented.

Offsetting

The pension holder keeps their pension fund intact, which is offset by giving the other spouse a greater share of other assets such as cash savings or equity in a shared home.

Pension Attachment Order

A portion of the lump sum and/or pension income will be paid to the other spouse when the pension holder retires, based on the fund’s value at that time.

How Can We Help?

Pensions in a divorce can bring a lot of complexity and uncertainty, and there is a lot to consider. Our expert team of family solicitors are on hand to walk you through the necessary steps.

 

 

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