How are the value of future pensions taken into account on divorce?

The current financial uncertainty stemming from Covid-19 needs to be considered carefully by couples who are currently going through a divorce or are thinking about starting the process. It is important that you do not overlook pension assets because they are not ‘visible’ capital such as property and bank accounts.

Simply put, a pension is a type of savings plan to help you save money for later life and will provide an income on retirement. The financial value of pensions can, and in many cases are, more valuable than the ‘visible’ assets in a marriage. As we begin to feel the ripple effect of Covid-19 on our economy it is extremely important to try to ensure some financial stability in the future.

One way to do this is to ensure that pensions are considered with all the other assets as part of one whole asset pot – ‘the matrimonial pot’. Splitting pensions on divorce can take place in three ways (this is explained in more detail in our previous blog):  

Off-setting – when all or part of the pension fund is offset by allocating a greater apportionment of the matrimonial assets to the other spouse. For example, one party may retain the family home rather than obtain a share of the other party’s pension.

Pension sharing - the pension rights are divided at the time of the divorce and one spouse receives a share of the other’s pension. The divorcees then continue with their own pensions as divided by the court.

Pension attachments – certain payments under a pension are paid to the former spouse of a pension scheme member when that member starts to receive their pension. 

The options above are reliant on separating couples having accurate valuations of their pensions. During this uncertain financial time this is still possible as the Family Law Team at Harrowells can provide advice, guide you through the process and refer you to a pension expert.

It is important to seek legal advice when you are considering how to divide your assets on separation to ensure that you reach a fair and reasonable settlement. Contact the Harrowells' Family Law Team if you would like advice on how your assets, including your pension, should be divided as to ensure that a fair outcome is reached for you.