Pensions are often dismissed as future income which may or may not be received, yet they can sometimes be the biggest asset in a marriage.
Pensions can be substantial capital assets, and all have a capital value (known as the cash equivalent value ) which can be a vital part of a divorce settlement. Since 2000, the court has had the power to share pensions between spouses on divorce, providing both parties with a tax-efficient and cost-effective way to achieve a ‘clean break’.
Seek specialist advice from friendly divorce and pension experts
Stephens Scown has been at the forefront of advice on pension sharing since it was introduced. We obtained the first reverse pension sharing order in the country, which maximised the overall pension value in the circumstances. We have also contributed to the recent Pensions Advisory Group report which informs lawyers and the court on how to approach pension sharing in different circumstances.
We enjoy well-established links with pension experts and actuaries, who can offer specific solutions and calculations depending on the type of pension involved.
Understanding pension types and the value they may hold
Pensions can be simple investment wrappers, usually holding cash or shares and sometimes property, or can be salary-linked defined benefit schemes through an employer, whether that be the government or otherwise. Most defined benefit occupational pensions (especially public sector schemes such as the Police, Armed Forces, Teachers, NHS and local government) as well as those in the private sector produce valuable benefits that are not immediately apparent from their cash equivalent value. There are many different types of pension with a wide variation in scheme rules and significant tax implications, so it’s important to obtain specialist legal and financial advice when comparing different pensions within a divorce.
The availability of state pensions is another important consideration. A dependent spouse may not have made sufficient National Insurance contributions to receive a full state pension, and therefore a compensating adjustment may be needed in any financial settlement.
Expert guidance to help you make the most of your options
Pension sharing isn’t the only option in divorce settlements. You can also offset the value of the scheme against other assets, or set the pension up to pay out an income or lump sum, without sharing the main scheme. We tailor our advice to your particular circumstances.
Pensions can be highly complex, especially when it comes to making the alterations that are fair to everyone if a marriage breaks down. The true value of a pension and the appropriate adjustment is not always obvious, so it’s wise to seek specialist advice at your earliest opportunity.
Combining sensitivity with sound legal advice
Chambers and The Legal 500, the two leading independent legal guides, rank our Family Law team as the best in Devon and Cornwall, so you can rely on us to help you achieve the best possible outcomes.