Along with the family home, pensions are often among the most valuable assets acquired during a marriage.
During financial settlement negotiations, pensions can sometimes be overlooked, with the focus instead being on more tangible assets (the family home being a perfect example).
Part of the reason why pensions are sometimes forgotten is that they are difficult to value, and you may require the help of an accountant or an actuary assess what a pension is worth.
If one spouse has a valuable pension, the court can make orders to share it with the other spouse as part of a financial settlement after divorce.
Two options open to the court include:
The spouse’s pension scheme will be debited by a specified amount which will be shared with the other spouse. In effect, the transferring spouse will lose part of their pension and the receiving spouse will receive a new pension in their own name.
When a spouse’s pension becomes payable, the pension administrators will be required to pay either part of the pension or a lump some to the other spouse.
Earmarking Orders are used less frequently now, with most people opting for the flexibility offered by Pension Sharing Orders. Spouses can opt to combine Pension Sharing Orders with other aspects of the settlement – for example, offsetting it against a share in the family home or other property.
Given the complexities in this area, and the substantial sums of money that can be involved, you really should take advice from a professional in this area, that is tailored to your individual circumstances.
Any mistakes made in this area could be extremely costly at a later stage.