How to Share a Pension in Divorce Proceedings

Our Consultant Solicitor Pauline O'Rourke considers how to share a pension in divorce proceedings.

One of the first questions I am often asked when advising on how to settle the finances on divorce is whether my client is entitled to a share of their spouse’s pension.

The answer is yes, although because pensions form part of the financial “pot” overall only part or even none of the pensions may end up being divided. One party for example may wish to keep the available capital or equity in the home as an offset against taking a share of the other’s pension i.e. a pension “offset”.

What pensions can be shared? Personal pension schemes, workplace schemes both past and present, and any additional state/contracted out schemes can all be shared. To receive a pension share, this must be included in a court order (the consent order on settlement) as this is sent by the court to the pension companies to compel them to put the share into effect. You cannot achieve this by informal agreement but a pension order does provide for a clean break.

So how is the share calculated? Pensions are valued by their cash equivalent value or CEV and how much the party is to receive of the other’s CEV is complex. A client may wish to ensure they have sufficient or equal pension income in retirement and this requires expert calculation. Just splitting the CEVs, say 50/50, may not produce equality if, for example, the other party has an armed forces, police, NHS or teacher’s pension and it is always advisable to appoint a Pension Expert In Divorce for a detailed report in such case. Other factors which impact on the size of the share include the parties and their children’s needs, the capital and income positions of the parties both now and in the future, their ages and the length of the marriage, standard of living, and other factors contained in the relevant law.

Pensions are often the largest and therefore a very important asset to address when divorcing and should not be ignored and very often require expert input before any agreement is reached or finalised.

If you know someone who is keen to progress their financial claims in divorce, then please ask them to get in touch. Just call  0121 2704760 for Pauline O’Rourke or 01788 555042.