Divorce and Pensions – What you need to know

If you are facing the end of your marriage or civil partnership, it is important not to overlook pension savings. Pensions are often one of the most valuable assets in a divorce, second only to the family home, therefore, any existing pensions should be considered in any financial settlement.

Divorce is one of the most stressful and painful times a person can go through and adding pensions into the mix can be daunting, but not dealing with pensions can have huge financial consequences long term.

It is not uncommon that on divorce, one party will have a significantly greater pension provision than the other, particularly if one is a lower earner or a homemaker. There are several options for how pensions can be split between separating parties, which may also depend on the rules of the pension scheme in question. Essentially there are three options:

Pension attachment orders

A pension attachment order is an order requiring the trustees of the pension to pay part of the pension payments to the other spouse, once the pension is in payment. It effectively amounts to a maintenance payment.

Offsetting arrangement

This essentially means that the party who has the pension will keep it, but the other party will be compensated by having a greater share of other matrimonial assets.

Pension sharing orders

A pension sharing order requires that a proportion of the pension fund be transferred into a pension fund belonging to the other spouse.

How an Adviser can help

Dealing with pensions on divorce can be a complex issue. Here at Caves, we can help you to deal with the pensions effectively and with as little stress as possible. Both offsetting and pension sharing require that the pension be valued, and we can ensure that the pension is valued accurately and provide advice and guidance on your investment options should a pension sharing order be issued by the courts.

Should you wish to seek financial advice, please do not hesitate to get in touch.

MHA Caves Wealth is authorised and regulated by the Financial Conduct Authority (FCA), Financial Services Register number 143715.

This communication is for general information only and is not intended to be individual product/investment advice, tax or legal advice. The views expressed in this article are those of MHA Caves Wealth and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. You are recommended to seek professional regulated advice before taking any action.