What happens with a pension on divorce?

16th January 2020

A surprisingly high number of couples do not take into consideration pensions at all when divorcing, even though many pensions have a high capital value.  Instead, immediately obvious dilemmas tend to take priority such as what happens to the family home, how bills will be met and of course if there are any children involved, where they will live and their welfare.

The value of a pension should not be overlooked and can be dealt with in several ways depending on your particular circumstances.  Many of our clients come to us confused as to how to deal with their finances including pensions on divorce.

Here are some of their concerns :-

What if I have contributed little or no money to the pension pot?
Both men and women may take career breaks for one reason or another during a marriage, resulting in one partner inevitably contributing more to the pension pot than the other, leading to the misconception that more or all of the pension belongs to the spouse who has contributed the most money.  However, this is not necessarily the case.  The law recognises that bringing up children for example, is contributing to the home and family life and therefore assets built up during marriage, including pensions, should be shared on separation.

How will the pension be split?
You can negotiate to offset the value of any pensions against other assets such as the family home.  For example, you may get a larger share of the family home when sold in return for your ex-spouse keeping their pension.  Alternatively, a portion of the pension can be reserved for use in retirement or the pension can be split and a cash sum transferred to a pension pot in your name.

Co-habiting couples – Am I entitled to a portion of my partner’s pension if we separate?
Many couples who live together without getting married believe they are ‘common law’ husband and wife and therefore have the same rights as a married couple.  However, the law does not recognise such a state meaning co-habitees are unable to make claims against each other’s pensions when the relationship breaks down, or against the other’s assets.

There are several ways in which pensions can be dealt with on divorce and there are many different kinds of pensions that have different outcomes in retirement.
Each case is unique which is why you should take advice from a specialist family solicitor who has expertise in financial matters and will advise on all the options available to you and your particular situation.
If you reach a settlement out of the Court arena or without legal advice you could find yourself in unexpected financial difficulty in retirement.

If you would like free, no obligation advice regarding how your finances could be affected on divorce or separation contact us online or call us on 0114 399 2355 to arrange a 30 minute consultation.

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