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Pensions and Divorce or Dissolution

Other than the family home a personal pension is often the most important asset to be added to the matrimonial pot when separating finances before divorce.

As a result, pension sharing orders and offsetting retirement benefits against other assets will continue to be popular because they achieve a clean break of pension rights.

However, many couples do not take account of the value of the fund or the pension benefits for purposes of the pension divorce settlement – Usually because this valuation can be rather complex and often only understood by financial advisers.

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    Solicitor Managed Consent Order

    Without obtaining a financial consent order through court, you will still be financially tied to your ex-partner, even several years after your divorce.

    We encourage every couple that gets a divorce through our services to obtain a financial consent order so that you can both move on with the confidence that no future claims can be made by either party.

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    Give us a call to speak to a member of our team in the strictest confidence. Or you can fill out our contact form and we’ll ring you back.
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    Our family law solicitors manage the whole clean break consent order process to secure your assets, finances and pensions including all of the forms and processing them with the courts.
    • Fixed-fee with no hidden extras
    • Includes Pension Sharing Order for the division of pensions
    • Does not include help or advice negotiating your agreement

    Frequently Asked Questions

    Can ex-wife claim my pension years after divorce?

    Pensions are often amongst the largest assets of a marriage and consequently many ex-spouses will seek to make claims against their previous partners years, or even decades after a divorce.

    When you get divorced in England or Wales you are legally separated and able to re-marry. However, the divorce does not sever the financial ties between you and your ex-wife. Without a financial clean break following your divorce she can still claim your pension, even years after.

    So yes, an ex-wife can claim a pension years after divorce, unless a financial consent order is obtained which is approved by court to become legally binding.

    Can ex-wife claim my pension years after divorce?

    Can my ex-wife claim my pension if i remarry?

    If either spouse remarries they are usually prevented from making certain financial claims against their ex-spouse, however this doesn’t automatically extend to pensions.

    Therefore, whether the ex-wife can claim your pension if you remarry will depend on the terms of the financial settlement that was agreed following your divorce and if a court order was made against any of your pensions.

    If a pension attachment order was made splitting your pension, either by directing a portion of the pension payment or as a lump sum payment, this will usually stop automatically if your ex-wife remarries, and no further payments would be due thereafter.

    If the court issued a pension sharing order to split your pension giving both of you your own individual pension entitlement this arrangement is not affected if either of you remarry in the future. This is because the pension sharing order provided you both with a clean break. The same rule also applies for pension offsetting.

    Can pension fund be split retrospectively after a divorce settlement?

    Having reached a financial settlement, including an agreement regarding any pension split with your former partner, you then need to obtain a pension sharing order after decree absolute that makes your clean break a legally binding agreement.

    Once a consent order is approved by the divorce court it becomes final, and neither party can make any claims against a pension or any other valuable assets in the future.

    However, where a financial settlement has not been formally ratified by a consent order, either party can apply their divorce pension rights and make a claim against their former spouse’s pension, regardless of how long they have been divorced.

    Pension sharing order after decree absolute

    How does a divorcing couple decide how to split pensions?

    Pensions can be shared on divorce or dissolution. The law calls these assets, and whether you are trying to negotiate pension assets between yourselves, or taking part in mediation, you need to understand pensions and just how is pension split in divorce.

    The arrangements you reach with your ex-spouse or civil partner on the division of your pension pot will form a major part of your financial agreement. A consent order, or court order, should then be obtained to ensure that the agreement reached is legally binding.

    It is always best if you can agree a financial settlement about how to split your pensions without the help of the court, but for those that cannot decide for themselves, the Judge will do it for you and may then impose a decision.

    How is pension split in divorce?

    How to keep your pension in a divorce

    How is pension split in divorce?

    Resolving a pension split during a divorce can be time consuming because first you need to know the value of the pension being split and getting this information can take time.

    The aim of any divorce pension split should be about fairness and equality based on needs, length of the marriage, children, and so on. Splitting money and assets equally doesn’t always mean 50/50, so be mindful of that when negotiating around the division of your pension funds.

    Cash equivalent transfer value

    The starting point for valuing pensions for the purposes of divorce is to obtain the cash equivalent transfer value (CETV). The cash equivalent is basically the amount which your pension scheme would have to pay into a new pension if you moved it to a new pension provider.

    It should be noted that CETV is a valuation of how much your pension pot is worth at that time, not what you will get as a pension income when you retire.

    Many things can affect the amount of money you get as a retirement income, for example financial market performance, how much of it is a tax-free lump sum and how much income tax is payable on pension payments received.

    Types of pension

    State Pension

    Provided by the government and contributed into by paying through National Insurance. State pensions are not usually shared when you divorce, but it is still important that you get a forecast of your pension entitlements at state pension age.

    Private Pension

    Also called workplace pensions, a personal pension (including SIPPS), occupational pension or public sector final salary pension, and these are set up either by an employer or by yourself to provide a pension income through an annuity.

    Valuing pensions for the purposes of divorce

    Is my wife entitled to half of my pension?

    Since pension sharing was introduced in 2000, a spouse who had not worked during a marriage or civil partnership will no longer be left without a pension entitlement after a divorce or dissolution.

    Pension sharing allows a former spouse a pension credit as a percentage of the value of retirement benefits. But perhaps you built up a large pension fund before you were married or entered a civil partnership. You would then think it only fair to keep that when you divorce or separate and may consider steps to do so.

    This is called ‘pension ring fencing’, but beware, in most cases when it comes to separation and pensions the court will often consider all assets to meet the needs of any children under 18 no matter when or how they were built up.

    Pensions built up during the marriage will generally be included in any divorce settlement negotiation. If you have built up a large pension fund before you got married you may be interested in learning more about what happens to any pension earned before marriage.

    NB: In Scotland only the value that has been built up during the marriage is considered – any pensions accrued before the marriage are not added to the matrimonial pot.

    Pension earned before marriage

    What is a Pension Attachment Order?

    When a Judge orders that some, or all the benefits paid from a pension are transferred to the person who doesn’t have a pension scheme this order is called a Pension Attachment Order or sometimes referred to as pension earmarking in Scotland.

    A pension attachment order is basically a form of spousal maintenance paid from a pension fund rather than from an ex-spouse. It is therefore different from a pension sharing order in a fundamental way.

    Where a pension sharing order splits a pension fund at the time of the divorce and leaves both parties with their own separate pension fund, a pension attachment order requires the pension administrator, upon the pension holders retirement, to pay a proportion of the pension income and/or a cash lump sum to the other party.

    The obvious drawback to this form of pension earmarking is that the person receiving the benefit must wait until the other person draws their pension. Furthermore, the pension payments cease if the person who owns the pension dies. Additionally, if the person receiving the pension payments re-marries this also has the same effect.

    What is a Pension Offsetting Order?

    Pension offsetting is usually done as part of a final divorce settlement and is approved by the courts by way of a consent order. So, what is pension offsetting and how does it work?

    Pension offsetting in divorce is an arrangement that simply allows one divorcing party to retain the total value of their pension (CETV), in exchange for an alternative matrimonial asset of the same value.

    This basically means that the party who waives the right to receive a pension benefit, either now or sometime in the future, instead gets an asset they can have right away. This could be the equivalent value of their share of the marital home, bank account savings, or any other joint asset within the matrimonial pot.

    For example, one party might keep all their pension fund while their ex-partner gets the house.

    What Is a Pension Sharing Order?

    Just like with any other asset of value in the marriage a judge has powers to share pensions and the law calls this Pension Sharing, but its sometimes also called pension splitting. This is implemented by the divorce court issuing a pension sharing order.

    In brief, a pension sharing order tells a pension provider to transfer a percentage of the funds transfer value to whichever spouse is to benefit from the order. All private pensions can be shared in this way and limited parts of the state pension can also be shared and subject to a pension sharing or pension attachment order.

    Who is pension offsetting for?

    Divorcing couples often choose pension offsetting as a way of reaching a financial agreement because it might be the only practical option available.

    For example, when a parent caring for young children may prefer to remain living in the family home, and there are few other shared assets other than the house and a pension pot that can be split.

    However, if it appears that the pension is likely to be worth considerably more than the family home in the future then a fairer outcome might be that the person who stays in the home also gets a reduced share of the pension.

    It should also be considered that a pension is usually taxable when it is paid to you as income at retirement age, whilst there is no tax liability when you sell a family home.

    Pension offsetting in divorce, it would seem, isn’t always as straightforward as it may initially appear, because it’s difficult to compare the value of a future income with an asset such as the family home. Therefore, working out if the agreement is fair can be risky.

    Pension offsetting in divorce

    Solicitor Managed Consent Order  – £599

    Our solicitor will manage your entire Financial Consent Order for you from start-to-finish, including the drafting and filing of the consent order under a one-off fixed fee payment.

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