Pensions and Divorce

If you are contemplating divorce, then a particular area of concern is likely to be your pension. Perhaps you have a pension that you wish to protect or maybe your spouse has a pension that you believe you are entitled to part of.

In determining the financial settlement, all assets will be considered as available for division, including any pension plans.  Depending on your circumstances, you might prefer to retain more of the realisable assets such as cash, shares or property.  Alternatively, you may wish to retain your pension and give your spouse a greater percentage of the house.  This process of negotiating over the different types of assets is called offsetting.

A pension fund may be divided in one of two ways:

• by a 'sharing' or 'splitting' order, when the pension fund gets divided into two separate smaller funds, or
• by an 'earmarking' order, when part of a person's pension fund is designated for the other spouse but the fund remains intact until they reach retirement and then both spouses' pension lump sum and pension income continues to be sourced from the same fund

Courts treat pensions differently from cash in the bank or your property, as they are less easy to realise, so the court will not match a pound in the pension fund with a pound in a property. What the court tends to do is treat capital and pensions separately so that it makes a property order and a pension order, if appropriate. 

Agreeing the distribution of pension benefits is one of the most complex areas of divorce, and it is vitally important that you are advised by a specialist family solicitor with experience in this area.

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Published:

29 September 2011