Pensions - to split or not to split?
07 March 2008
Pensions – To Split or not to Split
Pensions are assets and just like any other asset they should be taken into account in any divorce settlement. Although pension sharing orders have been available for many years now it seems that only recently the public have become aware of them. Pensions should never be overlooked as sometimes they are the most valuable asset.
It is easy to find out the value or your pension. You simply ask your pension company to provide you with a valuation.
When a husband a wife already have similar pensions then a pension sharing order may not be needed. But when one person has greater pension than the other a pension sharing order should be considered.
A pension sharing order literally splits a pension fund so it is possible for a part of the pension to be taken away and put into a new pension fund for the other person or into their existing pension fund to make it bigger.
Pension sharing orders are good because they mean that both husband and wife can be independent of the other and each can receive the income from their pensions in their own right. It avoids payments being made from one party to the other which would be lost if the paying party were to die.
Pension sharing orders are not just relevant to couples close to retirement although they will be at the forefront of the minds of couples in that situation. There are also relevant to younger couples who need to be aware of the long term implications of their divorce.
Don’t think that you are necessarily loosing out on future pension contributions if you are divorcing before retirement. It is possible to project forward and make sure the pension division is equal at the point of retirement even though the divorce is taking place now.
Initially it was thought that these orders would attract large fees by the pension company but this has turned out not to be the case.
So do not be tempted to overlook pension provision and ask your solicitor if a pension sharing order is appropriate for you.
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