In some cases pensions can be worth more than the family home, so despite the stress and emotions of divorce, it is crucial to keep a clear head and take specialist advice early. That is according to Thea Bennun, an associate in Stephens Scown’s family team, who has supported business owners, families with significant wealth and high earners through the divorce process.
Don’t lose out
Many people do not understand that pensions have a capital value that can be divided on divorce – they usually just think of them as future income and they are often ignored if they are not yet in payment. The fact is that pensions can be shared both when they are already in payment and when they are yet to be drawn.
Although specialist advice is required, particularly for high value and complex pension schemes, the fact that pensions are shareable at the time of financial settlement means that you do not have to wait until your ex has retired before accessing that asset. However, it seems that many people are unaware of this.
Despite the law changing in the early 2000’s to make sharing pensions on divorce much easier, a report by pension firm Scottish Widows found that pensions are only discussed in about 30% of cases.
Another recent report, this time from insurer Royal London, found that the average married couple has three times the pension wealth of the average divorced woman. This suggests that women are the ones likely to miss out after divorcing.
A simple reason for this could be lack of awareness. A good lawyer will be able to support you through the process and ensure that all eventualities are considered so that you don’t lose out financially.
Protecting a pension
For some people their priority will be to protect their pension, and there are many steps that can be taken to do this. This can include offsetting and detailed consideration of when the pension was accrued.
The issue of when a pension was accrued is an important one and should not be overlooked as it may have a bearing on whether the pension will be considered a matrimonial asset and be subject to division on divorce.
Whether you are looking to access your spouse’s pension or protect your own pension, this is a specialist area, so it is crucial to take advice early from a law firm with pension sharing expertise.
Pensions with an off-shore element or pension schemes that contain property, such as private schemes set up by business owners, are all subject to the same pension sharing rules. However, their complexities will need careful consideration and it may be prudent to involve an actuary to consider the nuances of more unusual schemes. Special considerations can also apply to armed forces and police pension schemes. Indeed, most occupation schemes have some form of hidden benefit, which should not be disregarded.
Thea Bennun is an associate in the family team at Stephens Scown. The team has top ranking in both Legal 500 and Chambers UK. Thea specialises in the financial aspects of relationship breakdown, particularly high value and complex financial work and pensions. To contact Thea, please call 01392 210700 or email firstname.lastname@example.org.