How to protect your pension in a divorce?

It's understandable that you might want to ring fence your pension rights in some way to protect them in a divorce but the reality is that in most cases it isn't possible to do so. More importantly, however, pension sharing will often be the best option for both you and you ex partner. If you keep your pension its value will have to be taken into account by "offsetting" it against other assets, which might mean you having to give up all or more of the equity in the family home or cash and investments that you could use immediately to meet your current needs. Having a pension share can also help achieve a clean break so that maintenance doesn't have to be paid for as long to your ex or at all.

How is pension split in divorce?

There are two main ways a pension is taken into account in a divorce settlement. Either there will be a formal court order transferring a specific percentage of a pension (up to 100%) from one of you to the other or there will be an unequal split of other assets to compensate the spouse that doesn't have the pension.

How long after divorce can you claim pension?

Claims for pension sharing will usually be dealt at the time you get divorced as part of the overall divorce financial settlement and order. However, it is possible in some circumstances for a pension sharing order to be made at a later date if it is replacing an earlier maintenance order.

Can I get half my husband's/wife's pension in a divorce?

A pension sharing order can be made in favour of either of the spouses or civil partners in divorce or dissolution proceedings for any percentage up to the full value of the pension, but as with the division of other assets on a divorce there is no fixed formula. You may get more of the pensions and less of the investments or business assets or vice versa.

How to value a pension for divorce?

There are different types of pension and the way of valuing them varies very considerably. A standard personal pension will be made up of cash or investments that are likely to be relatively easy to value at any given point. Public sector and final salary schemes are more complex. A crucial point to bear in mind is that values change. It's important to use figures that are as up to date as possible and even then there will nearly always be some difference, up or down, between the outcome you're working on in negotiations or court proceedings and what you actually end up with. There is no substitute for expert advice from your family lawyer who can then bring in independent financial advisers or an actuary if required. Getting it wrong can be very costly and certainly justifies the fees that you'll be paying to ensure you're protected.

Pensions

Name: familylawvlogger - Pensions And Divorce- What Do I Need To Know And To Think About?
Uploaded: 2023-11-28T10:16:06.1860487+00:00
Description: This vlog looks at the things you need to think about if you are getting divorced and have a pension- what information do you need? How is a pension valued? What can you do to share the pension benefits? Caitlin Jenkins, the familylawvlogger, discusses all things pension with her Mills& Reeve partner and pension expert, Philip Way.

Pensions can be one of the most valuable assets a couple has. They are often overlooked or undervalued in a divorce, but not by us. We're known nationally and internationally as experts on pension sharing orders and the treatment of pensions generally.

Pensions and divorce are a complicated mix. A pension can be one of the most valuable matrimonial assets. In some cases a public sector, company or personal pension can be worth more than your main home. The importance of understanding how pensions work and the options available to you when negotiating your divorce settlement can't be underestimated. This is one area of family law where choosing the right family lawyer is crucial. Get it wrong and you might not even realise the disastrous impact until many years down the line when it's too late. Get it right and your financial settlement can be structured in a way that provides the financial security that's crucial when you later come to rely on those pension benefits.

At Mills & Reeve we have unrivalled expertise and experience in pensions on divorce. Members of the team were involved in training the judges back in 2000 when pension sharing was first introduced and have been training other lawyers ever since. Most recently two of our lawyers were members of the multi-disciplinary Pensions Advisory Group (PAG) which has produced reports aimed at increasing understanding and consistency in this highly complex but key area of family law.

Different pension schemes, require different approaches

We've helped clients get the best outcome in divorces involving significant pension funds including:

Public sector pensions (eg NHS, Civil Service, Armed Forces)
Self-Invested Personal Pensions (SIPPs) where the pension assets included commercial property and complex financial products that create tricky valuation and tax issues
Small Self-Administered Schemes (SSASs)
Cases with an international element including where there's been a foreign divorce order against a UK pension
Final salary company schemes with a value of many million pounds.

Pensions on divorce FAQs

How to protect your pension in a divorce?

It's understandable that you might want to ring fence your pension rights in some way to protect them in a divorce but the reality is that in most cases it isn't possible to do so. More importantly, however, pension sharing will often be the best option for both you and you ex partner.

If you keep your pension its value will have to be taken into account by "offsetting" it against other assets, which might mean you having to give up all or more of the equity in the family home or cash and investments that you could use immediately to meet your current needs. Having a pension share can also help achieve a clean break so that maintenance doesn't have to be paid for as long to your ex or at all.
How is pension split in divorce?

There are two main ways a pension is taken into account in a divorce settlement. Either there will be a formal court order transferring a specific percentage of a pension (up to 100%) from one of you to the other or there will be an unequal split of other assets to compensate the spouse that doesn't have the pension.
How long after divorce can you claim pension?

Claims for pension sharing will usually be dealt at the time you get divorced as part of the overall divorce financial settlement and order. However, it is possible in some circumstances for a pension sharing order to be made at a later date if it is replacing an earlier maintenance order.
Can I get half my husband's/wife's pension in a divorce?

A pension sharing order can be made in favour of either of the spouses or civil partners in divorce or dissolution proceedings for any percentage up to the full value of the pension, but as with the division of other assets on a divorce there is no fixed formula. You may get more of the pensions and less of the investments or business assets or vice versa.
How to value a pension for divorce?

There are different types of pension and the way of valuing them varies very considerably. A standard personal pension will be made up of cash or investments that are likely to be relatively easy to value at any given point. Public sector and final salary schemes are more complex.

A crucial point to bear in mind is that values change. It's important to use figures that are as up to date as possible and even then there will nearly always be some difference, up or down, between the outcome you're working on in negotiations or court proceedings and what you actually end up with.

There is no substitute for expert advice from your family lawyer who can then bring in independent financial advisers or an actuary if required. Getting it wrong can be very costly and certainly justifies the fees that you'll be paying to ensure you're protected.

This vlog looks at the things you need to think about if you are getting divorced and have a pension- what information do you need? How is a pension valued? What can you do to share the pension benefits? Caitlin Jenkins, the familylawvlogger, discusses all things pension with her Mills& Reeve partner and pension expert, Philip Way.

Pensions

Further reading