As couples approach retirement age, their pensions can often be their most valuable assets, other than the family home. Indeed, one of the first questions we are asked by our older clients is, how their divorce and finances are treated.
Just like the family home when considering divorce and finances, pensions can form part of the financial settlement when considering divorce and finances.
For an older couple, discussions surrounding pensions can often make up a large proportion of the negotiations, as pensions can often form a significant percentage of the assets within a marriage.
It is possible to divide most pensions upon divorce. It’s important to note here that the basic State Pension cannot be split. The rules surrounding pension division can be complex, so it is important to seek advice from a solicitor relating to your individual circumstances.
Getting an accurate valuation of a pension, for the purpose of divorce and finances, can be tricky. Obviously, knowing a pension’s value is vital in order to have meaningful negotiations regarding the financial settlement. It is often necessary to involve an actuary to ensure that a pension’s value is accurately reflected.
It may be possible to get a share of your spouse’s pension/s (or they could get a share of yours). Your share of the pension could either be transferred into your name or you may be able to join your spouse’s scheme, instead.
If your spouse has already reached retirement age and is getting their pension, but you are not yet old enough, you could agree to get a share of their pension further down the line. This is known as deferred pension sharing.
Instead of sharing your spouse’s pension, you could agree that you will get a lump sum of money from your spouse’s pension when they reach retirement age.
In some circumstances, a couple may agree that, as part of the financial settlement, one spouse may get a larger share of other assets and the other spouse will keep their pension.
Whether this is viable will depend upon a number of factors, including the value of the other assets compared to the value of the pension/s.
These are just some of the ways that pensions can be dealt with upon divorce and finances. The rules can differ for couples who have already retired and are already receiving their pensions when they start the divorce process.
For older couples, pensions can often form a significant part of the financial settlement when addressing divorce and finances. For those in this situation, it is highly recommended that you seek independent legal advice, on what can be a very complex area of law.
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