Financial Matters
Pensions Issues
During marriage, a pension is typically meant to support the long-term needs of both parties well into retirement.
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When a marriage does not work out, the question of what happens with that pension is often a concern.
Pension issues can be a profound concern during a divorce, especially if they are larger. At Austin Kemp, we work with our clients to ensure you know what your rights are during the divorce and what could happen to these assets.
How Can Austin Kemp’s Divorce Solicitors Help You?
Austin Kemp’s divorce solicitors have the experience and knowledge to help you to manage all types of pension issues that occur during the divorce process. Pensions are like any other asset created during a marriage in terms of how they are divided. As a financial asset, the Court will make a decision about what is a fair settlement. For that reason, you need a divorce solicitor to help you learn your options.
Our team will:
- Help you assess the value of the pension
- Determine what other financial assets are owned by both parties
- Consider previous court cases that may shed light on the rights you have
- Create a plan for the division of assets, including the pension
- Negotiate to protect your pension and the long-term value of it
Our goal is to support you throughout the entire divorce proceeding. To do that, we provide you with accurate information about your rights. We also work closely to understand your goals, financial health and long-term ability to maintain the same quality of life. Do not agree to any pension sharing or division without the aid of a solicitor.
Pension Sharing and Divorce in the UK
The Court has the ability to divide pensions if deemed the fairest outcome in the divorce. This may require, for example, one spouse transferring all or a portion of the assets within the pension to the other party. A new pension fund is created for that second spouse in this situation. This is called pension sharing.
Generally, the Court aims to divide assets fairly, which may fall along the lines of a 50/50 split. However, this is not always what is determined as fair, especially when other assets exist. Typically, the Court will take all pension rights into account when making the decision to split them.
Key to this process is the proper valuation of the pension. There are several ways that the pension’s value can be determined based on the short-term value and the potential long-term growth. For cash and investments, the division is typically rather easy. However, for the public sector as well as any final salary schemes, the process is more complex. In these situations, we encourage you to work with a divorce solicitor with the experience to help you get an accurate and realistic value of your pensions before a financial order is made.
What Are the Pension Options for Couples Divorcing in the UK?
There are typically two ways the pensions may be managed during a divorce. As one of the most valuable assets within the marriage, pensions (whether from a company or a personal pension) may be worth more than property or other assets owned.
How Does Pension Sharing Work in a Divorce in the UK?
Pension issues are common in the divorce process. The key will be to work with a divorce solicitor to protect your rights. The first consideration is the type of pension scheme used, as this may result in different outcomes. Some examples include:
- Public sector pensions: This includes NHS, Civil Service, Armed Forces, and other such pensions
- Small Self-Administrated Schemes (SSASx)
- Self-Invested Personal Pensions (SIPPs) (these typically include commercial property or complex financial products with difficult valuation processes)
- Salary company schemes
- International investment pensions
Depending on the type of pension and the issues present, your divorce solicitor will make recommendations for the best way to manage the pension in the divorce. There are two typical options:
Equal sharing
The first option is for a formal court order to be created that will transfer a specific percentage of the pension to the other party to equalise capital or income. This is a common option for most divorces.
Unequal split
The second option is for an unequal split to occur. In this situation the other assets in the marriage may be used to compensate the party receiving less of the pension funds. Transferring property to offset the value of the pension is a possibility, but consider the value of that property and those assets in the long term.
In nearly all situations, pension holders want to do what is possible to protect their pension. For that reason, there are a few things to remember when going through this process:
- Be sure to obtain a fair and accurate valuation, including forensic accounting of your assets if needed.
- Protect your rights by having a divorce solicitor representing you. This way, you know what you are entitled to and can fight to protect what is rightfully yours.
- Be open about assets in a divorce. If you have assets outside of the pension, be clear about what they are, as they are likely to be found.
- Consider your long-term and short-term needs and goals. For example, the pension’s value may grow substantially more than the value of your home. When considering an equal split, then consider when you need to access those funds, as that can play a big role in the outcome.
At Austin Kemp, we work hard to minimise risk to our clients. We encourage you to use our divorce calculator to gain some insight into what could happen in your situation. However, know that you have options when pension issues exist. Our team can help you show the Court that you should retain all or most of your pension and why.
Allow Our Trusted Divorce Solicitors to Guide You
Austin Kemp’s divorce solicitors are available to help you manage all pension issues during a divorce. We encourage you to reach out to us early on to have the best ability to get the information and guidance you need during this time. Contact Austin Kemp today to learn more about how we can help you.
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