Four Questions Clients Frequently Ask About Pensions In Divorce

Why Do Pensions Matter?

On average, women tend to receive lower pensions than men. This is largely driven by employment and economic factors, such as shorter careers due to career gaps for childbirth, more women working part-time to cover caring responsibilities, and lower average salaries for full-time women workers.  Consequently, women going through a divorce often have significantly smaller pension provisions compared to their spouses, or they may have no pension savings of their own as they prioritized contributions to their partner’s pension plan. Failure to take these factors into account during the divorce proceedings can have serious financial implications and result in substantial difficulties during retirement.

What Can The Court Do About It?

The court has an obligation to achieve a fair and just outcome for both parties during divorce proceedings. They have the authority to address any disparities in pension provision between the individuals. The court has various tools at its disposal, such as issuing pension-sharing orders, which enable the physical sharing or division of one or multiple pensions. They may also issue pension attachment orders, which allocate a fraction of a pension to one party. According to Section 25 of the Matrimonial Causes Act 1973, the court must consider the value of any benefit that either party may lose due to the divorce, which includes pensions. As such, the court will have pensions in mind when evaluating the overall situation.

That Sounds Complicated. Can’t I Just Take More Of The Capital?

It is difficult to say definitively. While the Court has the power to allocate more capital to one party rather than ordering a pension-sharing arrangement, this may not always be the fairest solution. Comparing liquid assets like property or savings to pension assets is not an equal comparison as they are fundamentally different types of assets. One provides instant money, whereas the other generates income post-retirement. A specialist pension actuary would be required to ascertain the equivalent lump sum payment necessary to balance out a pension share arrangement. However, in less substantial cases, there may not be enough liquid assets accessible to settle pension claims without causing a significant impact to immediate needs, such as rehousing.

I’m Worried Now That I Might Not Be Getting A Fair Deal. What Should I Do About It?

To solve this problem, it is important to seek guidance from a skilled Family lawyer at the beginning of the process. They can offer insights into what information is required in relation to pensions and recognise situations where seeking specialised advice from a pension expert is necessary to figure out how to split the pensions and how that affects retirement. After gathering and reviewing the detailed report and recommendations, your lawyer can then negotiate an outcome that considers your retirement requirements.

Nadia Davis is an experienced Family Solicitor and Director with expertise in advising on various aspects of relationship breakdown such as Divorce and the Financial aspects of Marital Separation. For any inquiries about divorce or pension matters during divorce, please contact Nadia Davis on 07519 128 408 or ndavis@thursfields.co.uk or contact our Family Law Team on 0345 207 3728, info@thursfields.co.uk.

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