Personal Law

Pension Sharing

March 5, 2020

One issue that continually arises during financial proceedings is the issue of pensions.

Typically within finances the initial starting position for any split is 50/50 of the matrimonial finances. Usually, the Court’s view is to equalise any finances that the parties have; this includes equity within properties, any substantive capital assets, and pensions.

With respect to pensions, the Court’s approach is to provide a Pension Sharing Order that would either equalise the net value of the matrimonial assets or alternatively, match the value of the parties’ pensions in total. For example, husband’s pension is £100,000 while wife’s pension is £50,000, the Court would provide a Pension Sharing Order for approximately £25,000 in order to provide both parties with £75,000 worth of pension.

The rules with regards to pension shares are that a spouse may claim 50% of a pension that was accrued during the marriage. For example, the marriage was 10 years, husband’s pension has been accruing for 20 years, as such wife can only claim the value of the pension that was accrued during the marriage of 10 years and only 50% of this. As such, wife can only claim 5 years’ worth of pension by way of a pension share.
However, this is not always the case in so far as the parties may wish to offset some finances against the other. For example, the wife may require a higher share of the equity within the property in order to rehome herself due to her lower income and as such would receive a slightly lower share of the pension assets. Everything must be assessed on a case by case basis.

With respect to pension shares, the typical misconception is that the receiving spouse will receive a lump sum paid directly into their bank account. This simply is not the case, the normal process is for the pension share to be taken from the larger pot and then paid into the receiving parties pot thereby increasing their pension assets and future investment potential.

We do find anomalies with pensions whereby people have older pensions which are final salary.
With respect to these pensions, we would typically obtain independent financial advice as we cannot provide financial advice to clients. At this point we would obtain an Actuary report to accurately confirm the value of the pension which would be transferred across. The pension share is implemented upon completion of the financial remedy aspect of the divorce as well as obtaining Decree Absolute. Once completed, all documents will be sent to the pension companies for them to implement the pension share.

We offer a free, 15-minute, pre-bookable phone call with one of our experienced family law team. Alternatively, we offer a fixed £99 fee inc VAT  for a 45-minute meeting with one of our highly experienced family team. If you would like some confidential advice about a family legal issue, contact us today to book a meeting.

If you would like to discuss any aspect of your divorce include pension sharing then please get in touch on 01795 472291 or email enquiries@jarmans-solicitors.co.uk