Pensions and Divorce
If you are going through a divorce and are in the process of dividing up your assets, pensions are a very important area to give careful consideration. Pensions can be one of the largest capital assets of the marriage.
A common situation in divorce cases is where one party may have a substantial pension provision and the other might have little or none because, for example, one party has given up their career in order to look after their children. Obviously, in such circumstances the party without or only a limited pension provision will want to be adequately "compensated" for their lack of the same.
The Court can take your pension rights into consideration when dividing up the assets of the marriage. Please note there is no “mandatory” entitlement to a percentage of an ex-spouse’s pension.
Obtaining legal advice is therefore crucial in securing a pension provision and future security. Allocation of assets in divorce proceedings is based upon the principles set out in the Matrimonial Causes Act 1973 (Section 25). These principles are broadly based on the circumstances of each specific case, for example, consideration is given to the needs and number of dependant children.
The Court and the parties to a divorce have various options available to them. These options are as follows:-
‘Pension Offsetting’ - pension values may be "offset" against other assets of the marriage - for example, one person might keep the family home in exchange the other person keeps the pension rights (or a majority percentage of the same).
- ‘Pension Earmarking’- under the 1995 Pensions Act the Court can order that a percentage of the pension may be paid to one party on the receipt of the same by the other party.
An illustration of this is where a percentage is ordered by the Court to be paid to one party on future pension payments made on retirement to their ex-spouse.
- ‘Pension Sharing’ – under the Welfare Reform & Pensions Act 1999 the Court can split pension rights between husband and wife on divorce. The advantages with pension sharing are that one party does not have to wait for the other party to take pension benefits but may make her own arrangements with the sharing being done at a fixed date.
On a practical level, you will need to know what both parties pensions are approximately worth. Both of you will need to contact your pension providers and request valuations of your own pension pots. Please note your ex-spouse will not have any right to know what your pension value is without your consent and vice-versa. If your ex-spouse is not cooperative in providing the valuations of the pensions do not worry, as your solicitor will be able to request them from your ex-spouse's solicitor and, in the last resort, the courts have the power to order that they should be divulged.
As your solicitor we can guide you on this particular area and call upon experts when they consider it to be necessary.
Our Services
Full England and Wales Coverage
Low Cost Online Fees
Freephone 0800 587 6068
We are a member of Resolution.
