Pensions and divorce: what are the options?
For many divorcing couples the pension may be the second biggest asset after the matrimonial home. The Pensions Act 1995 first introduced the requirement to take pensions into account on divorce under English Law. This requirement had been in place in Scotland since The Family Law (Scotland) Act 1985.
A pension is valued using the Cash Equivalent Transfer Value (CETV), representing benefits accrued to date. This includes benefits accrued prior to the marriage. Therefore for anyone marrying later in their working life, this could be a significant sum. As part of the discussions on the finances on divorce it is therefore critical that advice is sought on what to do regarding the pension rights.
Pension sharing rules apply to civil partners as well as to married couples. Consequently, all references below to spouse/ex spouse will also include civil partners/ex civil partners.
What are the options?
There are 3 options available for dealing with the pension on divorce:
Over the next 3 days each option will be discussed in more detail highlighting the advantages and disadvantages of each.
If you are going through a divorce and would like to discuss your options relating to a pension please do contact me on 01932 698150 or email mary@mary-waring.co.uk.
My guide Pensions and Divorce can be downloaded here.
photo credit: Flickr/DrJohnBullas
Read More
If you enjoyed this post, we recommend the following as additional reading.
What lifestyle will you lead after your divorce?
Following divorce it’s very likely you will want to maintain the same lifestyle as you enjoyed during your marriage. If there are sufficient funds to go round that’s likely to be the outcome. However, consider what will happen if there isn’t enough money. The same income that was being used to support one household during…
Would you turn away a cash sum of £300,000?
The annual Scottish Widows Women and Retirement Report, now in its 13th year was published in November. A copy of the report is available here. But be warned, it doesn’t make good reading. The survey highlights that on average, women have savings pots half the value of men. There are several reasons for this: The ever…
Having a Blue Christmas?
Tips for the newly divorced or separated on how to survive the first Christmas. The first Christmas after divorce or separation can not only be tough, but for some, absolutely gruelling. The same may apply for the first Christmas that your children spend with your ex rather than you. However, if you are able to…