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Divorce and Pensions
Make every aspect of the divorce process as swift and stress-free as possible with the help of our specialist family law solicitors.
When you first think about dividing your assets upon divorce or civil partnership dissolution, you might think about things like the family home, your savings, and whether you have to pay spousal maintenance. Fewer people immediately consider what will happen to their pensions, particularly if they are young and retirement is a long way off. However, after the family home, your pensions are likely to be your highest value assets. It is therefore important to think about who will get what as soon as possible.
We can help you reach an agreement with your former partner about how to divide and arrange your pensions as part of your wider divorce financial settlement. We assist clients from a wide range of backgrounds and financial situations, with particular experience with High Net Worth individuals, international couples, and LGBT+ couples.
We have a number of locations across London, Bristol, and Bath, so give us a call at your local branch to arrange an initial consultation today. Alternatively, please feel free to fill in our online enquiry form and a member of our team will be in touch shortly.
How we can help you with your divorce and pensions
This is undoubtedly a very difficult time for you. You likely have many questions about how long the divorce or civil partnership dissolution process will take and the effect it will have on your standards of living and your children.
We aim to help you achieve an agreement efficiently, allowing you to get on with your life as quickly as possible. Our divorce and pensions expertise includes:
- General advice about pensions on divorce
- Pension Sharing Orders
- Pension offsetting
- Pension Attachment Orders
- Alternative Dispute Resolution, including family mediation and collaborative law
- Applications for Financial Orders and court proceedings (where absolutely necessary)
Many of our team are members of Resolution, an organisation of legal professionals dedicated to helping families achieve positive outcomes to family law matters. We avoid court proceedings wherever possible and instead utilise Alternative Dispute Resolution methods such as mediation and collaborative law.
As a firm we are members of the Law Society Family Law Advanced Accreditation which signifies our expertise with complex and high value family law matters, including overseas assets.
Our approach to divorce and pensions
Conflict often arises where a separating couple cannot agree about who should get what when it comes to splitting pensions. However, although divorce and civil partnership dissolution might conjure up images of court rooms, disputes, and stern judges, in the vast majority of situations, our clients are able to settle their financial matters harmoniously out of court.
We value cooperation and friendly but robust negotiation over stressful and costly court proceedings. We find that, for most of our clients, not only is agreement entirely possible, it is usually in their best interests – particularly where they have children who may be negatively affected by drawn-out disputes.
Wherever possible, we can help you access methods of Alternative Dispute Resolution, such as family mediation and collaborative law, so you have the opportunity to discuss the arrangement of your pensions in a neutral, cooperative environment.
Although we have expertise resolving financial matters amicably, we will never encourage you to settle for less than you deserve. We will work tirelessly to promote your financial interests and achieve a positive settlement which allows you to move towards the future with confidence.
What happens to pensions in a divorce?
The law’s approach to finances in divorce and dissolution is that, whether agreed in private between the parties or ordered by the court, the resulting arrangements should be fair.
The starting point to assess fairness is always a 50-50 split of the matrimonial money and assets. However, in reality, couples often do not contribute so precisely to the marriage or civil partnership and an unequal split may be necessary to enable both parties to maintain the same standard of living once the divorce or dissolution is finalised.
A couple’s pensions will form part of their financial arrangement along with other assets such as the family home and savings. In some cases, it may be appropriate to each keep your own pension entitlements; however, in others – for example, where you have built up considerable pension entitlements but your partner has not – it may be fairer to transfer some of your entitlements to them or otherwise find a way to provide for them in their retirement.
How are pensions divided in divorce?
There are a number of ways you can arrange and divide your pensions upon divorce or dissolution. The option you choose will depend on your individual circumstances and we can talk you through your options and provide insightful advice on which option sounds most appropriate for you.
Pension Sharing Orders
Pension sharing involves transferring a percentage of your pension to your former partner (or vice versa). This percentage will need to be transferred out of your scheme and into a new scheme or your partner can join your scheme (if your provider allows it).
Pension sharing on divorce will typically allow you to achieve a clean break from your partner – with no ongoing financial obligations towards each other – because the assets are split straight away and you can each decide what to do with your pension share without any interference.
Pension sharing can take into account all kinds of pension, including workplace pensions, additional state pensions, and private pensions. Basic or new state pensions are not included; however, if you are not entitled to a basic or new state pension, it may be possible to make a claim through your former partner’s national insurance.
The pensions must be valued, then fairly proportioned. You will need to apply to court for a Pension Sharing Order and, upon assessment of the matrimonial assets, the court will make the order to transfer a percentage of the pension.
Pension offsetting is also a popular option for couples who want a clean break. It involves giving various matrimonial assets to your partner to counter-balance the value you receive from your pensions.
For example, if you decide to split your assets 50-50 and your pension is worth £150,000 while your family home is worth £150,000 (and is unmortgaged), your partner will keep the family home to offset the value you get from your pension.
Some of the benefits of this option are:
- The outcome is simple and easy to understand
- It allows both parties to continue their lives with no financial obligations towards each other
- If your pension is small, it might be easier to keep the whole thing and give your partner a different asset
One disadvantage of this option is that the value of your assets are likely to change over time making it difficult to assess whether pension offsetting is fair in your particular circumstances.
Pension Attachment Orders (pension earmarking)
Pension attachment works by giving your partner an interest in your pension (or vice versa). Only when you start to draw your pension benefits will they receive their share (either in the form of monthly payments or a cash lump sum).
The drawback of this option is your partner will be tied to you for a long time even after the divorce has been finalised. Also, the non-scheme holder will often have no control over the contributions made towards the pension, how it is invested, or when they can start receiving their benefits.
Alternative Dispute Resolution
At Crisp & Co, we believe that with the right advice, divorce can be a painless and straightforward process. We confidently help our clients find quick resolutions to a wide range of divorce financial matters, particularly where high value assets such as pensions are involved.
With our assistance, it is highly unlikely you will need to go to court other than to make an application to confirm your pension arrangements. Our divorce solicitors are members of Resolution with specialist training in methods of Alternative Dispute Resolution such as mediation and collaborative law.
Mediation is the process of sitting down with your former partner and a qualified mediator to discuss matters such as pension divorce settlements.
Our team includes one mediator, Henry Crisp. Henry’s role will be to sensitively guide your discussions and help you avoid conflict.
For further information, please visit our Mediation page.
Collaborative family law
Collaborative law involves attending a series of meetings to discuss family law matters such as divorce and pensions with your former partner. Both of you will have your own trained collaborative lawyer to provide you with legal advice and negotiate on your behalf if necessary. You can also bring independent third parties such as accountants and financial advisors. For this reason, collaborative law is often suited to couples with more complicated finances.
For further information, please visit our Collaborative Family Law page.
Get in touch with our divorce solicitors today
Give us a call to arrange an initial consultation today. We have a number of locations across London, Bristol, and Bath where we can assist you. Alternatively, please feel free to fill in our online enquiry form and a member of our team will be in touch shortly.