How is a pension split in a divorce?16 Mar 2023 | Joanne Wescott
Pensions and Divorce
In a divorce, pensions are taken into account together with all other financial assets. Once all assets have been disclosed then one of our divorce experts can advise you on what you are entitled to.
It is not uncommon for a pension fund to be one of the largest assets in a divorce settlement, and how pensions are treated is important. The first step is to obtain a pension valuation, before looking at how an equalisation of pension pots can be achieved.
There are a number of factors that can impact what a fair figure is when considering equalisation. For example, we can advise you if pre-marital contributions will affect this. On some occasions, the age of you and your spouse together with any health conditions may warrant adjustments.
Achieving equalisation may mean that one spouse has to transfer some of their pension fund to the other spouse. This can be done by way of a pension sharing order or pension attachment order:
- a pension sharing order will divide a percentage of the pension fund now and transfer it into a separate fund in the other spouse’s name;
- a pension attachment order earmarks an amount of the pension pot which will then be paid out to the other spouse when the pension comes into payment at retirement.
If a pension sharing order or pension attachment order does not appeal to you, then we can discuss if off-setting would better meet your needs. This is where each party retains their own pension funds, but the spouse with the lower (or even no) pension receives some additional asset instead. This is typically a larger share of equity in the family home or a lump sum of money.
Is my spouse entitled to a share of my pension?
Whether a pension fund has to be divided will depend on the individual circumstances. Most pension funds will be considered to be a matrimonial asset and therefore will be considered for division. However, there are some circumstances when a court may decide that a pension should not be divided, and these circumstances tend to fall into one of the following categories:
- the marriage has been a short one and it is not equitable to divide the pension fund;
- the pension fund is very small and the cost of dividing it would not be worthwhile;
- the pension fund has been accumulated following separation; or
- the pension fund was accumulated prior to marriage.
If you have separated from your spouse but have not yet obtained a consent order or order from the court formalising your financial settlement, then your former spouse can still make a claim over your UK pension.
If your pension fund is held overseas then your spouse will still have an entitlement to a share of it, provided it is considered a matrimonial asset. If you hold an overseas pension, you should contact one of our specialist lawyers as soon as possible as the courts do not hold the same powers, and your options for dividing an overseas pension will differ.
Are all pensions taken into account in a divorce?
Your former spouse may have an entitlement to your private pension, but they will not have an entitlement to your basic UK state pension but your additional state pension could be shared.
If you or your spouse have a private pension, then it must be disclosed as part of the financial disclosure during the divorce process. All pensions, whether held in the UK or abroad, must be disclosed.
How is an English pension shared after an overseas divorce?
If you were divorced overseas but your spouse has a UK pension here you should contact us for legal advice on how to obtain a share of that pension. Only a court in England and Wales can make a pension-sharing order for a pension held here.
How Osbornes can help?
We have a number of expert London divorce lawyers with experience in representing and advising clients on all aspects of pension division and protection in divorce financial settlements. We deal with both UK and overseas pensions.
If you are overseas or outside London, we have high-speed video conferencing facilities and a full online service to ensure you are kept up to date and fully appraised of your case and legal options.
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Joanne Wescott Partner
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