When a decision is made for a married or civil partnership couple to separate, one of the issues that can become relevant is that of pensions, which for many people, can be quite frightening.
The following summaries try to explain the different types of pensions which, it is hoped, will take that fear away:-
- Defined Contribution Pensions:-
Usually referred to as the following:
- ‘A Stakeholder’ – This is for employees. A contract between you and your pension provider with flexible investment. Your employer may contribute.
- ‘A personal’ – As above, but this applies whether you work, don’t work or are self-employed.
- A pension called an ‘occupational money purchase scheme’ – These are run by your employer, and you have less say on the type of investment.
- Defined Benefit Pensions:
These are pensions where the outcome is based upon an amount awarded to you which is paid at the end, for example, a final salary scheme.
- Public Sector Pension:
These are also defined benefit pensions which vary depending upon which public service body you work for.
- State Pensions:
You must get state pension forecasts to determine what you are projected to receive from the state at qualifying retirement age. Please note that a state pension cannot be claimed against through the family Court but can be an important factor in considering what a persons expected income could be in the future.
The above pensions are the most common, there are other pensions available and it is important that you provide us with as much information as possible in order that we can then identify the scheme and its value.
Upon divorce, the parties can exercise their rights to each other’s pension by understanding the overall values so that you can each reach the incomes you require in the future so far as is reasonably possible.
There is not necessarily a set formula as to how pensions should be divided. There are ways that this ‘split’ can be achieved such as:
- Pension Share:
A percentage of your spouse’s pension can be transferred into a separate fund of your choice or vice versa.
- Pension offsetting:
A spouse retains their pension in full (or a large amount) however they receive less from the sale of another matrimonial asset, such as the former matrimonial home.
- Pension attachment:
A spouse receives a share of the other parties pension lump sum and income until they die or remarry, and this is only received whilst the pension is in payment. This is rare because of the limitations.
Conclusion
It is very helpful for you to provide the value of your pension to your solicitor as soon as is possible. Pension providers can be slow to give this information and therefore the sooner a request is made, the better.
Once valuations are obtained and exchanged with your ex spouse, it is likely that more information will be required in order to obtain a more accurate picture of the valuations. A pension expert (otherwise known as an Actuary) can be appointed by both parties and the cost of appointing an Actuary is normally split between the parties. The Actuary will provide a report, detailing how the pensions should be divided between the parties as fairly as possible.
Consultation
If you are experiencing difficulties in reaching an agreement with your ex partner in respect of family law matters, John Hodge Solicitors can offer a free initial consultation to discuss your issues. The appointment can be held in person, over the phone or online.
We have offices in Bridgwater, Bristol, Clevedon, Wedmore, Weston-super-Mare, and Yatton.
Free initial consultations are subject to internal checks and availability. The information above does not constitute specific legal advice and it is highly recommended that independent legal advice is sought in respect of division of pensions.
Andrew Campbell
James Young