Frequently Asked Questions about Pension Sharing in DivorcePublished on: 05 October 2020
Will I Have to Share My Pension?
This partly depends on when your pension was accrued. If it was accrued during the marriage or during cohabitation immediately before the marriage, then it will be considered a matrimonial asset, which is open to be shared. If your pension, or part of it, was accrued before the marriage or cohabitation period, then it may be excluded as a non-matrimonial asset.
However, a judge could still decide that is necessary to share part or all of a pension accrued before the marriage, if it is necessary for a fair outcome. Ask your Family Lawyer for advice tailored to your specific circumstances.
What Does It Mean If My Pension Is Shared?
Pensions can be shared in two ways. One way is for a proportion of your pension income to be paid directly to your ex-spouse by your pension provider. The payments only start upon your retirement when you start to receive your pension income. This is known as a “pension attachment order”.
The second way is for a percentage of your pension’s capital value to be transferred out of your pension pot into a pension in your ex-spouse’s sole name. The transfer takes place immediately, so that your ex-spouse can invest their share in a pension product of their choice and you can continue paying into your pension pot to build it back up before retirement age. This is known as a “pension sharing order”.
Your Family Solicitor can advise you about the pros and cons of these options.
How Much of My Pension Will I Have to Share?
The amount of pension to be shared will depend partly on the extent of your ex-spouse’s pension, the other assets in the marriage, and all the circumstances of the case, including how close you are to retirement. Speak to your Family Lawyer for guidance about how your specific circumstances may affect your case.
It may be possible to “offset” pension sharing against other assets in the marriage. For example, a wife may be able to keep all of her pension if the imbalance is offset by her husband taking more of the capital from the family home. A judge will only allow “offsetting” in this way if the overall outcome meets both parties’ needs, balancing pension needs with housing needs and income needs.
It may be necessary to have a pensions actuary prepare a report, to show what share would provide equality of income on retirement, and what is fair in terms of “offsetting”. Your Family Lawyer will be able to advise you on your best options for pension sharing.
For more information, please contact us.