Pension Sharing Order

Pension sharing isn’t usually the first thing couples think about when divorcing but Pension benefits can be more valuable than the family home and therefore an important consideration when planning your financial future after divorce.

Calculating how they should be divided is a complex issue, particularly where a ‘final salary scheme’ is involved and as a result the Court will generally insist on an independent, expert financial opinion as to how such assets should be shared.

There are three options for dividing up pensions as part of a divorce:

• Sharing. Pension sharing is a formal agreement to divide pension assets at the time of divorce.
• Offsetting. The value of the pension is offset against other assets. For example, one spouse keeps their pension and the other is given alternative assets (e.g. property or cash) of the same value.
• Earmarking. All, or part, of the pension is earmarked to be paid to the ex-spouse when the other starts to draw pension benefits.

To be able to divide or transfer a pension the provider needs consent from the court. The involvement of the courts ensure there’s a fair settlement of marital assets. The pension sharing order issued by the court sets out how much of a pension(s) will be given to you or your ex-spouse.

Overall, pension sharing offers a clean break and is a good option for those:

• with high value pensions compared to assets
• who are close to retirement and therefore have limited opportunity to build up a similar pension or
• are thinking of re-marrying soon, as the pension sharing order cannot be changed later

For those with an adequate pension already or if keeping the family home is a priority, then a pension sharing might not be the best option.

Our financial planning team can discuss whether pension sharing is right for you and guide you through the process of getting a Pension Sharing Order if this is the course of action best for you.

Next steps: get in touch

If you require financial advice regarding whether a pension sharing order is in your best interests, contact our friendly team on: 01225 308333 or financialplanning@mogersdrewett.com

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