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The Importance of Pensions on Divorce

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A recent Which? survey carried out in November 2021 found that only 15% of divorcing couples include pensions in their financial settlement upon divorce.

Pensions often form one of a couple’s most sizeable and significant assets.  Like other assets such as the family home or cash held in the bank, pensions will form part of the overall financial matrimonial pot to be divided upon the breakdown of a marriage or civil partnership.

Pensions are an important asset that provide you with an income upon retirement and it is therefore important that they are considered carefully upon divorce or dissolution of a civil partnership.

It therefore important to consider how a pension fund or funds should be divided between spouses or civil partners as part of any divorce or dissolution proceedings.

The court have a number of powers available to them when considering how a pension fund should be divided.  These powers include:

  • An order which transfers a percentage of a pension fund into a separation pension fund in the other spouse’s name. The result being that each party, upon implementation, have their own pension fund which they can continue to build over time.
  • An order which keeps the pension fund intact but requires a portion of the pension income upon retirement to be paid to the other spouse.
  • It is also possible for the pension holding spouse to keep their pension intact and offset this by giving the other spouse a larger share of the other capital assets, such as equity in the family home.

There are a number of advantages and disadvantages associated with each of the above options.  Pensions are complex assets and so expert advice is essential when deciding what the best approach is in any individual case.

If you are going through a divorce, or considering starting divorce proceedings, and considering what should happen regarding yours and your spouse’s finances, it is important to seek specialist legal advice at the earliest opportunity.  Here at Gardner Croft, we can provide you with guidance and advice which will suit your individual circumstances. We will listen to you, we will advise you and we will guide you through the process.

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