Watson Esam | News | Divorce and Pensions

One of the major assets on divorce, which is often overlooked, is pension.

If the parties have been married for any real length of time and there is a disparity in their pension provision, then this can be addressed by way of a Pension Sharing Order, which transfers part of one party's pension fund to another party to be held in their sole name.  Effectively, it is like transferring a bank account from one party to another.  After the transfer, the pension fund belongs totally to the party into whose name it has been transferred.

In deciding how much one party should receive from the other party's pension, it is necessary to look at the length of the relationship, the age of the parties and how much has been built up during the period of the relationship to determine the value of each party's pension fund.

Values of parties' pensions are given by the trustees of the pension scheme, but these are not always accurate.  Many pension schemes have hidden benefits, which need to be taken in to consideration.  This is especially true of schemes such as government schemes, teachers' pension schemes and armed forces' pension schemes.  Many solicitors take these funds at face value rather than investigating the real value of such pensions.

In addition, if one party is approaching pensionable age, then consideration has to be given to the effect of a Pension Sharing Order in respect of income.  For example, a £300,000 pension fund split equally between husband and wife, in the sum of £150,000, would probably not give the wife as much income as the husband.

There is also tax relief on pension contribution payments, which means that in real terms, pension contribution can be worth more than the actual payment being made by each individual, with one party paying a high amount into their pension fund or an amount is being paid into their pension scheme by their employer.  This needs to be taken into consideration as a benefit which the other party will lose on divorce.

Back to Watson Esam's news page