If you are going through a divorce or the dissolution of a civil partnership, you may be experiencing emotional upheaval and be confused about what the future holds. At such a time, finances might not be your top priority, but it is important that you establish financial clarity and put plans in place to protect yourself and your family. Pensions may be the most valuable asset within a marriage, so it is essential that you understand you and your spouse’s pension status and how pensions may be shared in the event of a divorce or dissolution.

Contact our divorce and separation solicitors at Ison Harrison for expert help and support with managing your pension in the event of a marriage or civil partnership ending.

Our family team will guide you through each step of the process, so that you and your family can receive the right protection. If you require legal advice, call us on 0113 284 5000 or alternatively email family@isonharrison.co.uk

What happens to my pension when I get divorced?

A spouse or civil partner has a legal entitlement to a share of your private pension in the event of a divorce, this can include pensions that were accrued prior to the marriage. However, they will not have an entitlement to your basic UK state pension, although they may be entitled to a share of any additional state pension you are awarded.

The courts will take your private pension into account and include it as an asset when you decide to go through with a divorce or dissolution to end your marriage or civil partnership.

A pension valuation is the first thing you should establish when considering your financial assets in a divorce. Our expert legal team can then advise on how equalisation could be achieved and what a fair figure is likely to be. This will include looking at a number of factors such as pre-marital contributions, age and health conditions, but essentially the objective is to ensure that the respective pension pots of you and your spouse are divided fairly and so that each party has an equal foundation upon which to build a secure financial future. There are typically three ways this is achieved:

  • Pension sharing – the parties agree or the court decides a fair percentage split and accordingly transfers pension credits from one party to another. This is the most common type of pension Order.
  • Pension attachment – often called ‘earmarking’, this identifies an amount of a pension pot that will be paid to the other party when the pension comes into effect in retirement. These Orders tend to be less common.
  • Pension offsetting – this is where the party with a lower pension pot, or no pension pot, instead receives a larger valuation of a different financial asset to make up for this shortfall, usually a lump sum of money or a larger equity share in the family home.

How to agree on pension division in a divorce

Some married couples may have pre-empted the complexity of pension division by preparing a pre or post-nuptial agreement. This provides financial clarity from the outset and avoids potential disputes at a later stage. However, it is common for divorcing couples to amicably agree on pension division during the divorce process, and it is a standard element of the financial assets of a divorcing couple.

If you or your spouse have a private pension, it must be disclosed as a financial asset during the divorce process, whether it is held in the UK or abroad. This would then be considered alongside other assets from the marriage, such as property, bank accounts, business interests and savings and investments, as part of the divorce settlement. At Ison Harrison we can help you achieve full transparency on yours and your spouse’s assets and advise on how these may be fairly and reasonably divided to form part of the divorce settlement, this includes your private pension. In order to protect your pension and ensure it is fairly divided upon divorce, you need to:

  • Valuation – Get an accurate pension valuation. This may involve instructing a pension actuary.
  • Advice – Get professional advice from a solicitor with expert knowledge on how pensions work in divorce and what options are available for a fair division.
  • Assess – Assess your options.
  • Negotiate – Negotiate a fair division of your respective pension pots with your spouse, This can be achieved outside of court through solicitors or mediation.
  • Courts – If necessary, you may need to go to court where the division and sharing of your pension will be discussed and decided upon by a Judge, if no prior agreement can be reached. This will form part of your final divorce settlement, alongside the division and sharing of your other financial assets.

Ison Harrison can help and support you throughout the divorce process and particularly with the complex issue of pension division. Our experienced divorce and separation solicitors can help you establish full financial disclosure and a full understanding of pensions within the case. We can then help you with negotiations and court representation, where necessary, to find a fair and reasonable settlement with your spouse, which protects your assets and best interests both now and in the future.

For expert advice, call our family law team today on 0113 284 5000 or email family@isonharrison.co.uk.