When going through a separation or divorce, you may not be sure what happens to yours and your partners’ pension. Below we explore some of the most frequently asked questions about this:
My partners’ pension is the same amount as the equity in our house, should I just accept the house?
This is one of the most common questions I get when clients have been in a lengthy marriage and have discussed some way the financial split that they are looking to achieve. Pensions are not calculated pound for pound and consideration will need to be given to the pot that you will have in retirement in comparison to the party who retains the pensions. There are a number of ways in which an agreement can be reached without simply swapping out one asset for another. It is important that you get advice on this topic.
What happens to my pension on divorce?
Firstly the valuation of the pension needs to be obtained for all pensions that the parties have. The capital value of these need to be collected. Often a report will need to be prepared to determine the % that one party needs of the pension to achieve equality in retirement. The report will then advise how the pension can be shared and what options are available to you. There are 3 ways in which a pension on divorce can be dealt with and advice about this should really be obtained.
Can a pension in payment be shared?
Yes, to put it quite simply, it can. However the person receiving the pension benefit will not be permitted to draw the tax free lump sum from the pension on transfer as this has already been claimed.
Why should I not agree to a pension share which gives me an equal split of pension?
As I have already referred to above pensions are not taken as money pound for pound. Each pension is unique depending on the scheme that the pension is with. By accepting this you may not be achieving what you are intending. It is better to seek advice.