The value of a pension can change over the years, due to various factors. This can make the ultimate value of a pension very difficult to predict. Accurately valuing a pension fund is notoriously challenging. Yet, as pensions can be a key part of financial settlements upon divorce, valuations can be extremely important.
Things can be further complicated if a foreign pension is involved.
Back in August 2017, figures from the Ministry of Justice published in the Financial Times showed a 43% increase over the past year, in the number of divorcing couples who sought to split their pensions.
This rise in the number of pension sharing orders (court orders which split a pension when a couple gets divorced) shows us that more and more people seem to be sharing their pensions as part of their financial settlement upon divorce.
In England and Wales, the total amount of your pension that you have built up both before and during your marriage, can be taken into account (with some exceptions – speak to a solicitor for more information).
How your pension/s will be divided depends on the rules of your particular pension scheme/s. How the value of your pension will be calculated depends on the type of pension you have.
Normally, pensions are valued using the “cash equivalent transfer value”. However, depending on the type of pension, this sometimes does not really give an accurate valuation.
It’s advisable to seek help from a professional in this area, as it can be highly complicated.
As touched on above, foreign pensions are not treated in the same way as domestic pensions when it comes to splitting them upon divorce.
In 2016, the case of Goyal v Goyal made it clear that pension sharing was not available when it comes to foreign pensions.
However, just because English courts do not have the power to make pension sharing orders in relation to a foreign pension, this does not mean that foreign pensions can never be split as part of the financial settlement upon divorce.
The judge in the case, Mr Justice Mostyn, said that just because English courts could not make a pension sharing order in relation to a foreign pension, it did not mean that there was not another way for couples to split a foreign pension as part of their divorce settlement.
If couples could reach an agreement which was backed by undertakings, then they could potentially obtain an order to share the pension in the foreign jurisdiction where the pension was located.
Foreign pension sharing and the potential pitfalls is a highly specialist area of law, so it is extremely important to seek expert advice from a divorce solicitor experienced in this area, if it could apply to you.
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