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 [email protected]