Pensions on divorce settlements
Pensions are classed as an asset just like other joint property, and you are legally required to take pensions into account as part of your divorce settlement.
For many people, a pension can be the largest asset after the matrimonial home.
If one party has significantly more in pension funds than the other at the point of separation, then there will be considerations given to whether a Pension Sharing Order would be appropriate.
Further information on divorce can be found on our divorce page.
Options for dividing your pension in a divorce
There are several different options to consider when dealing with pensions in a divorce.
These include:
- Pension sharing on divorce
A Pension Sharing Order is an order which effectively distributes a pension fund between two people so that the pension would generate an income on retirement for both parties. - Pension attachment or earmarking
A court may re-direct part or all pension payments to an ex-spouse when the pension pays out. These orders are very rare and pension sharing is generally a preferred way forward due to there being a clean break. - Offsetting
You can offset the value of a pension against other assets, such as savings or the family home.
Our pension and divorce solicitors can help you with the best option for your individual circumstances
Protecting your pensions in a divorce
If you are separating and you have reached an agreement whereby each party is going to retain their own pensions then it is important to have a financial remedy order drafted by a solicitor. This sets out clearly the terms of the agreement and states that your pensions will not be shared.
Without a financial remedy order, an ex-spouse could make an application to the court years after separation and years after the divorce has been finalised to have the pension assets reconsidered by a court.
If you have not yet married, then you could seek advice about obtaining a prenuptial agreement to try and protect your pension assets or at least the proportion of the pension asset accumulated before the marriage took place.
What factors can impact your pensions in a divorce
As pensions are seen as a joint asset, they are usually split equally when you divorce.
However, it may not always be the case. A court will take into consideration the factors outlined in section 25 of the Matrimonial Causes Act 1973, for example a court will need to take into account, amongst other things:
- The income and resources of each party
- The financial needs of each party and any children of the family
- The duration of the marriage
- The ages of the parties
How our solicitors can support you with your pensions and divorce
Our pension and divorce solicitors can look at pension assets and offer advice as to whether it would be possible to offset against other assets in the matrimonial pot.
We can offer advice about pension sharing and can also recommend pension experts who can calculate the exact percentage of a pension that would be required to equalise pension income on retirement.
