Do I Have to Share My Pension After Divorce?

Pensions are considered a matrimonial asset. As such, they are taken into consideration in divorce settlements. It is crucial for you to consider the range of options available when dealing with pensions and divorce.

Our team of divorce lawyers in Milton Keynes can guide you through the options in detail when considering how pensions are shared after divorce and this article offers a useful summary.

In many cases the fairest and most appropriate way to deal with a pension is for it to be shared by agreeing a pension sharing order. This means a proportion of the benefits in a pension scheme are transferred to the spouse’s pension.

There are alternatives and parties to a marriage can agree that instead of sharing the pension, one party can retain all or more of those benefits, in consideration of the other spouse retaining more capital.

There are a number of factors that need to be considered in reaching an agreement that is fair and equitable for the parties involved. When pension funds are a material part of the assets involved, consideration needs to be given to a number of issues – for example:

• The nature of the pension rights
• The ways that pension rights can be applied
• Powers available to the Court

There is a guide prepared by the Pension Advisory Group – supported by the President of the Family Division of the Family Justice Council – to provide more formal guidance to be applied when any issue regarding the pension fails to be determined in financial remedy proceedings.

As set out above, your partner’s pension is treated as an asset of the marriage and taken into consideration in a divorce settlement.

However, one of the complexities in terms of how a pension should be treated is that unlike the capital assets of the marriage, the benefits received from a pension can be relevant in terms of both capital and income.

There is also the added complexity in dealing with pensions that the cash equivalent transfer value disclosed is not always a true picture of the value of benefits paid. Expert guidance should always be sought to look at the true value and advise on the most effective way to divide this matrimonial asset.

There are three main ways of dealing with pensions in a divorce. These are:

• Pension sharing
• Pension attachment
• Off-setting orders

The first step towards financial resolution is always that each party to the marriage should give the other full and frank disclosure of their financial position. This is normally by exchange of Form Es. Included within a Form E there are questions in relation to pension assets held. In order to answer the questions detailed in the form, it is standard practice to ask your pension company to complete a Form P1 and/or to provide you with a full cash equivalent value for divorce purposes.

Pensions assets in a marriage need to be fully considered in reaching a fair and reasonable settlement as they can often be the most substantial asset in a marriage

Ready to take the next step? As leading divorce lawyers in Milton Keynes, our team of family law specialists can advise and guide you from the moment we start working with you. We also have offices in in Bicester, Watford and London. Talk to us in confidence and find out where you stand. Get in touch – we’re here to help.

This article is intended for the use of our clients and other interested parties. The information contained in it reflects the author’s view and is believed to be correct at the date of publication. However, it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional legal advice.