Pensions and divorce
It has been widely publicised that divorced women are losing out when it comes to pensions. Many do not know what their options are or how valuable a pension can be in a divorce/dissolution settlement.
Knowing what a pension is worth could mean the difference between being comfortable in retirement and counting the pennies.
It was recently reported in the Mail Online that on average divorced women over the age of 50 end up with a pension worth £100,000 less than that of their male ex. HM Revenue & Customs and the Office for National Statistics reported that between 2016 and 2017 59% of men contributed to private pensions compared to only 41% of women. Geographically the North West ranks as one of the lowest areas in England for adults contributing to a personal pension.
For couples who have been in a long term marriage or civil partnership the pension pot is likely to be one of their biggest assets and should be considered when looking at financial settlement during the divorce or dissolution.
So, how do the courts deal with pensions upon divorce or dissolution? There are generally three options:
• Pension sharing – this allows one person to get a percentage of the total value of the other person’s pension. It can either be transferred into an existing pension, a new pension or an extra pension as part of the existing scheme. This option provides a clean break between the parties.
• Pension offsetting –this is useful where one party has a larger pension pot than the other. As opposed to sharing that pension the value of it can be offset against other joint assets such as the former family home. This option also allows a clean break between the parties.
• Pension attachment – this is where a percentage of one person’s pension is paid monthly and/or in a cash lump sum on the retirement of the other party. As it is a form of maintenance payment there is no clean break on the financial settlement following divorce or dissolution.
Pensions are more important in the financial settlement than people realise and they should be seen as part of the overall financial package upon divorce or dissolution. Pensions can help ensure the parties are looked after later in life and well after a divorce has been finalised.
If you need expert advice call Barber & Co Ramsbottom to speak to Jacqueline Birkett who runs our Ramsbottom branch. Jacquie is very experienced in all areas of Family Law but what sets her apart with financial issues is her previous experience as a qualified accountant.
Our advice is good because we listen