Pensions

When it comes to pension rights and answering the question ‘do I have to share my pension if I divorce,’ the frustrating response to hear from a Manchester divorce solicitor is that there isn’t a yes or no answer to your pension rights question. In this blog we look at just how complicated it can be to unravel pension rights on divorce and answer some of the common questions that are raised by husbands or wives worried about the thought of having to share their pension on divorce.Divorce and pension solicitors If you are divorcing and have questions about pension rights or are worried about sharing your pension as part of a divorce financial settlement then Manchester divorce solicitors at Evolve Family Law in Whitefield can help you. Call us on 0345 222 8 222, complete our online enquiry form or email robin@evolvefamilylaw.co.uk. Whitefield based Evolve Family Law solicitors are approachable and friendly, providing pragmatic expert divorce, pension and financial settlement solutions. Call us on 0345 222 8 222 and let us help you.Jump to: Pension and divorce experts Joint pensions Are pensions ever ignored in divorce financial settlements? Are pensions always shared equally? How to value a pension in a divorce financial settlement Can I ring fence my pension and leave it out of the financial settlement? When is a pension shared? Should I pension share or pension offset? Pension and divorce experts Manchester divorce solicitors are often told by husbands or wives that their pension can't be shared on the breakdown of their relationship for a whole variety of reasons including: The pension can't be touched until I retire so can't be shared now The pension was started before the marriage The pension is linked to the family business You can't share a final salary pension on divorce The pension isn’t valuable enough to share on divorce My employer won't let me share my work pension on divorce Pensions can't be shared if you are in a civil partnership and not married.   All of those are wrong! If you start off on ‘the wrong foot’ with misinformation about pension rights on divorce it is very easy to either: Believe your pension can't be touched and therefore be unwilling to negotiate on pension rights and divorce Assume that your husband or wife's pension can't be worth much and is incapable of being divided or shared until you both reach retirement age.   To avoid reaching fixed views on pension rights and divorce it is best to take early legal advice from Manchester divorce solicitors and financial advice so you know where you stand legally and financially. Early advice means neither of you should have entrenched pension positions and be more open to negotiating a financial settlement that may or may not involve sharing pensions.   Manchester divorce and pension solicitors For answers to your questions about pension rights and divorce call the Manchester divorce solicitors at Evolve Family Law in Whitefield on 0345 222 8 222 or complete our online enquiry form .Joint pensions Many husband and wife's assume that their pension is a joint pension with their spouse. A Manchester divorce solicitor or financial advisor will tell you that a pension is only legally owned by one party so technically the pension will belong to you or to your spouse. Even though you may or may not own the pension, on divorce most pensions are capable of being shared so that the non-owning husband or wife gets a share of the pension.   Pensions can be a complex topic as there are so many different types of pension. You may be adamant that your pension is joint with your husband or wife because: You are both shareholders and company directors in a family business and have a pension linked to the business You both set up private pension schemes at the same time You have property or land owned in a pension fund.   No pension is a jointly legally owned asset. Even if you and your spouse both have funds in a SIPP or own a business property within a pension fund you will both have individual shares in the pension pot.   Although pensions are not joint assets because they are not legally owned by both of you they will normally be taken into account in any divorce financial settlement and can be shared or the pension value offset against the value of other family assets.Are pensions ever ignored in divorce financial settlements? In most separations and divorces pensions are not ignored in the divorce financial settlement. That is because the pension is often the most valuable asset after the equity in the family home.   There are a few limited family scenarios where the value of the pension won't feature highly, for example: A young couple with no children A very short marriage with no prior period of cohabitation before marriage and no children A marriage where the husband and wife agreed to ignore the value of pension assets if they separated or divorced by signing a prenuptial agreement or a postnuptial agreement. This is OK if the terms of the prenuptial agreement or postnuptial agreement meets the needs of the husband and wife.  Are pensions always shared equally? Pension assets may not be shared at all, for example, you may agree or the family court may order that one of you gets a bigger share of other assets, such as the equity in the family home or savings.   If you do agree to a pension share or the financial court order includes a pension sharing order then your husband or wife could get a percentage from one to a hundred percent of your pension fund.   The court is more likely to make a financial court order that includes pension sharing where: The value of the pension funds makes it worthwhile to share the pension. If the pension only has a small value then the administrative costs of sharing the pension may not be justified There are sufficient assets to not require one of you to need to receive all or the majority of the equity in the family home to rehouse yourself and to offset the value of the pension.   Even if you and your spouse or the family court orders that a pension is split equally between husband and wife that doesn’t necessarily mean that you will both get the same amount of pension income from your equal share of the pension fund. The pension income differential can be down to age or gender. That is why many Manchester divorce solicitors and family courts prefer to arrange for pensions to be shared to achieve equality of pension income on retirement rather than a straight equal division of the capital value of the pension fund.  How to value a pension in a divorce financial settlement It is often thought by a husband or wife that valuing a pension in divorce and financial settlement proceedings is easy as you can just rely on the annual statement that pension administrators provide. Most of these annual pension statements will include what is said to be the ‘cash transfer value’ of the pension fund.   If the fund value of the pension is accurate then you may think it is a straight forward process to either agree a pension offsetting figure (the amount that one of you will receive for not getting a share of the pension) or agree the percentage of the pension share. However, the cash transfer value of a pension can be wildly inaccurate or misleading. For example, two pensions may both have a cash transfer value of £500,000. You would assume therefore that as both pensions are worth the same amount they will produce the same pension income on retirement. That’s not the case because one pension may be a final salary pension and the other a personal pension or a SIPP.   Getting expert legal advice and actuarial pension advice can be crucial in helping you: Accurately value your pension assets Reach a fair financial settlement.   Manchester divorce and pension solicitors For help with how to value a pension in divorce proceedings call the Manchester divorce solicitors at Evolve Family Law in Whitefield on 0345 222 8 222 or complete our online enquiry form .      Can I ring fence my pension and leave it out of the financial settlement? Manchester divorce solicitors are often asked if pensions can be kept out of divorce financial settlements. Even if you both agree to ignore the value of a pension the asset still needs to be disclosed. A husband and wife are under a duty to provide full financial disclosure. Failure to give information about your pension isn’t in your interests. If you do not disclose an asset then any agreement or financial court order could potentially be overturned at a later date because of the lack of full and accurate financial disclosure.   It therefore pays to disclose the existence of all assets, including pensions, even if you and your spouse chose to ignore the value of the pension in your financial settlement negotiations.   Many husband's and wife's struggle with the idea that the value of their pension may not be ignored in the financial settlement, even though: They started the pension before the marriage and all the pension contributions were made prior to the marriage Their pension is in payment Their spouse is in a new relationship and so they don’t think that he/she needs a share of their pension They signed a prenuptial agreement to say that the value of a pension would be ignored.   Whilst all of the above point are very valid, a family court looks at a range of factors when deciding whether or not to make a pension sharing order as part of a financial settlement. For example, the court will look at both a husband's and wife's needs including pension income needs but will also factor in the length of your marriage, your ages and any pre-marriage contributions or wealth and the existence of any prenuptial agreement or postnuptial agreement.    When is a pension shared? Many husband's and wife's are very keen to avoid a financial settlement that includes a pension sharing order because they mistakenly believe that their spouse will continue to receive the benefit of their hard work and ongoing pension contributions and pension growth from the date of the financial settlement until eventual retirement and pension draw down. That isn’t the case.   If you agree to your pension being shared or the court makes a pension sharing order after a contested financial settlement court hearing then: The pension sharing order will be implemented after the pension administrators receive the financial court order, pension sharing order annex and the decree absolute of divorce. The pension administrator has four months from receipt of the relevant paperwork to implement the pension sharing order Once the pension sharing order has been implemented there will be two separate pension pots (assuming there isn’t a one hundred percent pension sharing order) and any future pension contributions made by you after the order has been implemented will be credited against your pension pot and you will get the benefit of all the pension and investment growth in your pension pot In most cases you will be able to decide when to take your pension completely independently of when your former husband or wife choses to retire and get the pension income from their share of the pension. The position is more complicated if your pension pot consists of property and is a Self-invested pension plans (SIPPs) or is a Small self-administered schemes (SSASs). It is also sensible to take detailed advice about the earliest date you will be able to take the pension income as the pension rules may be different for you and your former spouse and it is best to be fully informed before agreeing to a pension sharing order.    Should I pension share or pension offset? The question of whether you should pension share or offset is really down to your priorities. However, if you are not able to reach a financial settlement with your husband or wife by agreement then the decision over whether to pension share or pension offset may be taken out of your hands as a family judge will decide how your assets , including pensions, should be divided.   If you agree to a pension offset then the value of the pension is offset against other assets owned jointly or individually. This may be vital to you if your priority is to stay in the family home or to keep your shareholding in the family business or family farm. Equally, it can be short sighted to ‘put all your eggs in one basket’ and just get equity in the family home rather than a share of your spouse’s pension.   You may think that, in time, you can downsize and get money out of the family home to fund your retirement. However, the cash from the sale of a family home may not generate anywhere near as much in pension income as a share in your spouse’s final salary pension scheme would have.   Alternatively, you may be adamant that you want to keep one hundred percent of your pension because you realise just how valuable your National Health Service, police, fire service or final salary pension is in comparison to the income you could realistically generate from the pension offsetting figure. However, you may benefit from reality testing your plan to keep all your pension and get less or no equity from the family home as that may mean you struggle to rehouse yourself so you are asset poor and pension rich. All very well for the future, but does it mean you will have a tough time of it until your hoped for retirement and is it worth it?   When it comes to pensions and divorce financial settlements there are always choices to be made, from how you value the pension to whether you share or offset the pension. Taking expert legal advice from Manchester divorce solicitors can help you make informed choices, looking at the short and long term needs of you and your family.Divorce and pension solicitors If you are concerned about pension rights and divorce and have pension and divorce questions then Manchester divorce solicitors at Evolve Family Law in Whitefield can help you. Call us on 0345 222 8 222, complete our online enquiry form or email robin@evolvefamilylaw.co.uk   Whitefield based Evolve Family Law solicitors are approachable and friendly, providing pragmatic expert divorce, pension and financial settlement solutions. Call us on 0345 222 8 222 and let us help you.Latest From Our Divorce & Pensions Blogs:

Divorce and pension rights is a tricky topic. Most couples who decide to divorce think that either they will not be able to ask for a share of their spouse’s pension as they are not retired yet or think that their spouse’s pension will not be worth that much.   Specialist divorce solicitors and family judges know just how complex divorce and pensions rights can be. Get it wrong with the valuation of a pension or with pension options and it may have an enormous long-term financial impact on the spouse with the pension or alternatively with their former partner.   In recent years divorce professionals have seen how badly wrong a financial settlement can go, to either the husband or wife, when complicated pension assets have not been properly valued and non-specialist lawyers and financial advisors have taken a cavalier attitude to the treatment of pensions on divorce.   The Pensions Advisory Group The Pensions Advisory Group (PAG) was set up to help produce a best practice guide for divorce solicitors, family judges, financial advisors and couples going through a divorce to help them understand the treatment of pensions on divorce.   The PAG is an interdisciplinary group including judges, divorce solicitors, pension actuaries, academics and pension lawyers. The Group has recently published a guide to the treatment of pensions on divorce that is good reading for divorce experts and divorcing spouses.   Divorce and Pension Rights Whitefield divorce solicitors recognise that the Pension Advisory Group’s guide to the treatment of pensions on divorce may not be everyone’s idea of a good bedtime read. It is not a book that you would think of as a light summer time read. However, divorce solicitors recommend that divorcing couples do dip into it so that: They understand why their divorce solicitor and financial advisor are recommending that pensions are valued by a pension actuary; They appreciate why it may not be safe to just keep pensions of similar value to one another as the reality is that one of the pensions may, in real terms , be worth a lot more than the other even if the cash equivalent transfer values of the two pensions are similar to one another; They understand the long-term implications of agreeing to pension offsetting and, for example, keeping the house as their financial settlement rather than getting a share of the pension.   Pensions and Spousal Maintenance  If a couple divorced some time ago and no pension provision was made then the couple may think that it is too late to sort out pension provision.  That is not necessarily the case.   If a husband and wife split up without obtaining a financial court order then potentially financial claims could still be made, including pension claims.   If a husband and wife sorted out a financial court order at the time of their divorce and the court order says nothing about pensions it may still be possible for a pension claim to be made. If a spouse is receiving spousal maintenance payments under a financial court order then potentially they can ask the court to capitalise the spousal maintenance payments and the court may have the option of making a pension sharing order in place of the spousal maintenance payments.   It is worth speaking to a divorce  and pension expert about spousal maintenance and pension options as spousal maintenance will stop on the death of a spouse but payment made under a pension sharing order will not do so and nor can they be varied by a later financial court order.   Divorce and Pension Rights The problem with divorce and pension rights is that most separating couples do not know their rights and therefore do not know the right questions to ask of their divorce solicitor. Sometimes a husband or wife does not know how to find an expert to help. The first port of call should be to a specialist divorce solicitor who should help you understand the pension and legal jargon and explain why the correct treatment of pensions on divorce is so important to you and your family.   If you want more information on the treatment of pensions on divorce or if you are concerned about your pension and financial settlement options then please call Whitefield divorce solicitor Robin Charrot on +44 (0) 1477 464020 or email him at robin@evolvefamilylaw.co.uk

Divorce and pension rights is a tricky topic. Most couples who decide to divorce think that either they will not be able to ask for a share of their spouse’s pension as they are not retired yet or think that their spouse’s pension will not be worth that much. Specialist divorce solicitors and family judges know just how complex divorce and pensions rights can be. Get it wrong with the valuation of a pension or with pension options and it may have an enormous long-term financial impact on the spouse with the pension or alternatively with their former partner. In recent years divorce professionals have seen how badly wrong a financial settlement can go, to either the husband or wife, when complicated pension assets have not been properly valued and non-specialist lawyers and financial advisors have taken a cavalier attitude to the treatment of pensions on divorce.   The Pensions Advisory Group The Pensions Advisory Group (PAG) was set up to help produce a best practice guide for divorce solicitors, family judges, financial advisors and couples going through a divorce to help them understand the treatment of pensions on divorce. The PAG is an interdisciplinary group including judges, divorce solicitors, pension actuaries, academics and pension lawyers. The Group has recently published a guide to the treatment of pensions on divorce that is good reading for divorce experts and divorcing spouses.   Divorce and pension rights Manchester divorce solicitors recognise that the Pension Advisory Group’s guide to the treatment of pensions on divorce may not be everyone’s idea of a good bedtime read. It is not a book that you would think of as a light summer time read. However, divorce solicitors recommend that divorcing couples do dip into it so that: They understand why their divorce solicitor and financial advisor are recommending that pensions are valued by a pension actuary; They appreciate why it may not be safe to just keep pensions of similar value to one another as the reality is that one of the pensions may, in real terms , be worth a lot more than the other even if the cash equivalent transfer values of the two pensions are similar to one another; They understand the long-term implications of agreeing to pension offsetting and, for example, keeping the house as their financial settlement rather than getting a share of the pension.   Pensions and spousal maintenance  If a couple divorced some time ago and no pension provision was made then the couple may think that it is too late to sort out pension provision.  That is not necessarily the case. If a husband and wife split up without obtaining a financial court order then potentially financial claims could still be made, including pension claims. If a husband and wife sorted out a financial court order at the time of their divorce and the court order says nothing about pensions it may still be possible for a pension claim to be made. If a spouse is receiving spousal maintenance payments under a financial court order then potentially they can ask the court to capitalise the spousal maintenance payments and the court may have the option of making a pension sharing order in place of the spousal maintenance payments. It is worth speaking to a divorce  and pension expert about spousal maintenance and pension options as spousal maintenance will stop on the death of a spouse but payment made under a pension sharing order will not do so and nor can they be varied by a later financial court order.   Divorce and pension rights The problem with divorce and pension rights is that most separating couples do not know their rights and therefore do not know the right questions to ask of their divorce solicitor. Sometimes a husband or wife does not know how to find an expert to help. The first port of call should be to a specialist divorce solicitor who should help you understand the pension and legal jargon and explain why the correct treatment of pensions on divorce is so important to you and your family. If you want more information on the treatment of pensions on divorce or if you are concerned about your pension and financial settlement options then please call Manchester divorce solicitor Robin Charrot on +44 (0) 1477 464020 or email him at robin@evolvefamilylaw.co.uk

Most of us do not like thinking about planning for our retirement. We often say tomorrow but for many of us tomorrow never comes. However if you are getting divorced you have to face the prospect of the end of your marriage and sorting out financial claims, including pensions. The temptation, when there is so much stress and a need to move on with your life, is to accept a financial settlement without paying enough attention to pensions. After all, there is always tomorrow. Research from Royal London says that women who divorce end up with less than half the property and assets of married couples and, more importantly, less than one third of the average pension pot. Royal London are rightly encouraging those who are divorcing to recognise the value of pensions and to take pension  advice to make sure , in Royal London’s words , that  divorced women do not continue to be ‘pensions poor relations’. The Royal London research analysed the data from the government’s Wealth and Assets Survey (WAS), and looked at the pensions and property of divorced women compared to with married couples. The main points that came out of the Royal London research were: For women who are aged over fifty the average married couple has three times the pension wealth of the average divorced woman; and Women who are aged over fifty and divorced do not have more equity in their family home to compensate them for lack of pension wealth. Some may shrug off this Royal London research, thinking that it is very specialist. However, one in three women aged 55 to 70 will experience marital breakdown or divorce. Therefore, whilst Royal London has looked at complex data it is a common problem, the effects of which are only appreciated long after a divorce and when a woman comes to draw her pension income.   Divorce and pension rights As a specialist Manchester family law solicitor advising on divorce and pensions claims my experience shows there are a number of reasons why pensions are not properly considered on divorce. The main reason that pensions are not divided fairly is that people do not understand them and think that they will have many years to worry about building up a pension. There is often a reluctance, on the part of both husband and wife's to get a pension report from an actuary or pension expert. That is partially because people worry about the cost of a report and partially because they do not see the relevance of a report. Frustratingly, from a Manchester divorce solicitor and pension expert’s point of view, the importance of the pension report often only becomes apparent after you have received the report. Nowadays I tend to ask if someone would buy a house without a survey. The answer is invariably no, and a puzzled glance questioning why I would even contemplate buying a house without a surveyor’s report. However, pensions can be just as valuable as a family home and so they need to be treated with the same respect. The other reason people do not look at pensions seriously on divorce is that retirement, even if it is five or ten years away, seems a very long way off indeed. A pension expert will tell you that it is not and even ten years of making pension payments into a pension scheme may not recoup what you have missed by agreeing to an unfair division of the pension assets on divorce. When you are getting divorced, it is hard to get to grips with all that is happening in your personal and financial life. That is why you need an expert divorce solicitor. They in turn need to be helped by a pension actuary or expert to look at the true value of the pension pot and to consider your pension and financial settlement options.   Pension valuations When you get divorced and sort out financial disclosure, you will be presented with what is called the cash equivalent transfer value of your pension and that of your spouse. The paperwork and figures may look impressive but they can be highly misleading. If you have a private pension with a transfer value of £100,000, you would think that your pension pot is as valuable as your spouse’s final salary pension pot with a transfer value of £100,000. You would therefore assume that a fair financial settlement would involve you both keeping your pensions, with no need for a pension sharing order. You could not be more wrong as a pension actuary may tell you that the occupational pension will pay out three times the pension income of the private pension scheme. That means if no pension sharing order is made one spouse is on triple the pension income of the other spouse. It is important that even if you are a bit hazy about pensions that you chose a divorce  solicitor who knows about pension rights and the importance of getting expert help from a pension or financial advisor or actuary. As a Manchester divorce solicitor, I know how vital it is to protect someone going through a divorce. Divorce and pension rights are not likely to be a priority topic but I know my job is to look at both short term and long term interests, and that normally includes the option of a pension sharing order. By Robin Charrot For information and advice about pensions and financial claims on divorce please call me on +44 (0) 1477 464020 or contact me by email at robin@evolvefamilylaw.co.uk Appointments available in Prestwich, Manchester and Holmes Chapel, Cheshire

Pensions and Divorce The Mirror has reported on research carried out by Age UK on women losing pension rights on divorce because they aren’t claiming a share of their husband's pension fund. This isn’t a problem just affecting a few women. Statistically one in three women aged 55 to 70 experience marital breakdown and divorce. So what’s the reason women are losing out on pension rights on divorce? As a specialist divorce solicitor advising on financial and pension claims on divorce my experience shows there are a number of reasons why pensions aren’t claimed on divorce: A desire for a speedy settlement as people don’t want to wait for up to 3 months to get what is known as the cash equivalent transfer value of the pension fund before reaching a financial agreement; Being told by a spouse that the pension pot is only small and not worth bothering about – that may not be the case .Sometimes even if the pension fund value is relatively small it can still generate a reasonable pension because of the nature of an employer pension scheme; Being told by a spouse that the pension pot isn’t relevant to the divorce as the pension contributions were made prior to the marriage – that may not be relevant if you lived together before your marriage or if your ‘’needs’’ mean that you should share the pension fund; Being told by a spouse that the pension can't be shared as the pension can't be accessed until retirement – if a pension fund is shared at the time of the divorce and financial Court order then you will get a pension sharing order. The implementation of the pension sharing order and your decree absolute of divorce ensures that the agreed percentage of your spouse's pension fund becomes your pension fund; Being told by a spouse that the pension can't be shared as it is a company pension scheme – that isn’t correct as although ( depending on the company pension scheme rules ) you may not be able to become a member of the company pension scheme you will be able to invest your share of the company pension scheme in a private pension fund; Being told by a spouse that you don’t need a share of the pension as you are getting spousal maintenance payments each month – spousal maintenance will stop if you remarry or your spouse dies. A share of a pension fund and retirement income won't stop if you remarry or your ex-spouse dies. If you get spousal maintenance from an ex-spouse you can still claim a share of the pension fund – often the spousal maintenance will stop or reduce when you can access your share of the pension fund; The priority being to keep the family home or to get more than half the proceeds of sale of the family home in lieu of getting a share of the husband's pension – that is fine provided that the pension fund has been valued expertly so you know the value of the asset you are giving up a claim to and you have thought how you will manage financially in later years if you forgo a share of the pension.  Pension rights and advice If you are separating it is really important to get advice before you sit down with your spouse and reach a financial agreement. Why? Well I am all for couples reaching an amicable agreement over how to split their assets, house and pensions but if you don’t have an idea of what you are entitled to the agreement may not be fair. Although you might be able to renegotiate after you have taken legal advice from a divorce solicitor it can be harder to do so when ideas have become fixed and your spouse is of the mind-set that he’ll be keeping the pension. Pension rights and reality checking As well as getting legal advice it is also important that you get financial advice on your financial options and reality test any financial settlement. I am often told that the priority is to keep the family home but that can come at the price of a good retirement income if a spouse’s pension fund isn’t expertly valued or if the planned eventual down size of house isn’t reality checked to see if the sale of the family home is likely to raise enough cash to generate a retirement income. Although everyone wants to reach a quick agreement and move on with their lives sometimes it is just as important to get the information you need to value assets, get impartial legal and financial advice and then take the time to reality test and reflect so that your financial settlement includes provision for your retirement. Contact Us Today