How Pensions Are Split in Divorce | Trusted Divorce Solicitors in Leeds
Pensions can be one of the most valuable assets in a marriage and can play an important role in achieving financial stability following a divorce. Ensuring that there is a fair division of pensions in a divorce is crucial.
At Sugare & Co Solicitors, we have provided expert divorce and family law advice in Leeds for over 50 years. Our highly trained and experienced solicitors and barrister specialise in pension division within a divorce, having helped thousands of clients achieve exceptional settlements that protect their financial future.
How Are Pensions Split in a Divorce?
There are three key ways that pensions can be split in a divorce settlement:
1. Pension Sharing Orders
A pension sharing order provides for one spouse to transfer some or all of their pension to the other spouse. This usually results in both parties having their own pension pot moving forward. This is the most common form of pension order that the Court makes. It is usually seen as the fairest method, particularly in cases where one spouse has a signfiicantly greater pension than the other at the point of separation.
2. Pension Offsetting
With pension offsetting, both spouses retain their pensions but if one party has a larger pension than the other, the value of the pension is balanced against other marital assets, such as property or savings. For example, one spouse may keep their pension, while the other receives a greater share of the former matrimonial home.
3. Pension Attachment Orders (Earmarking)
A pension attachment order, previously known as "earmarking," results in one spouse receiving some of the other spouses pension at the point at which the pension begins payment. We would normally advise against this option as it does not provide financial independence straight away, and payments may cease if the pension holder gets remarried or dies.
Key Considerations When Splitting Pensions in Divorce
1. Getting an Accurate Pension Valuation
It is important to get an accurate valuation of all pensions. The Cash Equivalent Transfer Value (CETV) is the tool that is commonly used to obtain this, but this sometimes fails to reflect the true worth of a pension, particularly with final salary pension schemes. We will sometimes advise a client to instruct a pension expert, e..g an actuary, whose job it is to undertake complex calaculations in order to assess the correct value of the pension.
2. Age and Retirement Plans
A younger spouse may choose to prioritise immediate assets such as the home or savings, whilst an older spouse may focus on securing pension provisions for their retirement. There are also tax implications when it comes to pensions and a divorce that need to be carefully considered.
3. Professional Advice
Pensions can be extremely complicated and making a mistake in their split can have significant financial consequences. Seeking specialist advice from an experienced divorce solicitor can help ensure you receive an equitable settlement. We will always advise our clients to obtain financial advice too and we work with a variety of financial advisors.
Why Choose Sugare & Co Solicitors?
With over 50 years of experience in family law and divorce settlements, we are one of the leading divorce law firms in Leeds. We provide expert legal advice on pension division, financial settlements, and asset retention. Our team of solicitors and our in house barrister, Matthew Dobkin, are dedicated to securing excellent outcomes.
If you need advice on pensions in divorce or any other aspect of family law, please contact us today to arrange a consultation with one of our expert divorce solicitors in Leeds.