How to Protect your Pension in Divorce
In any divorce, the best way to protect your pension is to get a clean break, which means that your partner can’t claim against your pension further down the line.
Alternatively, you might want to enter in to a Pension Sharing Order. This will make anything you and your former partner agree about your pensions legally binding, and mean your partner can’t claim for any more of your pension further down the line.
Your pension is probably one of your largest assets, so we understand if you want to protect it when getting a divorce.
But when you get married your pension becomes a marital asset, and divorce alone does not cut the financial ties of marriage. This is why it’s so important to consider your pension in any financial agreements you and your former partner make when separating, in particular in longer marriages.
The law around how your pensions should be divided is not straightforward and really depends on your situation. It might be that your pensions are of similar value, in which case you might be happy to just keep your own pensions and move on.
Sadly, this isn’t always the case and we see far too many couples divorcing without even discussing their pensions, even where one may have a much larger pension than the other.
If you’re worried about what might happen to your pension in divorce, speak to one of our Divorce Solicitors. We will look at your unique situation and tailor our expert legal advice to your needs.
What Happens to Pensions in Divorce?
There are 3 ways that your pensions can be dealt with in divorce:
- Pension Offsetting - If you have a larger pension than your former partner and want to keep the whole thing, you can do this by offering them more of your other marital assets.
- Pension Attachment - When one of you retires, the other person will receive either a lump sum payment or an income stream from the other person’s pension. In some case you may receive both, but the Court doesn’t often use this method.
- Pension Sharing - This is where one person receives a percentage of the other’s pension, and this percentage will be transferred in to their name. This is the most common way of dealing with pensions as it has more flexibility for the person getting just a percentage of the total sum.
There’s no best option and what you and your former partner decide should be based on your circumstances.
Because there’s no hard and fast rules when it comes to pensions in divorce, it’s always a good idea to get expert legal advice if this is something you’re concerned about.
Our Divorce Solicitors can advise you on what might work for your divorce. Your pension will be part of the total value or matrimonial assets that you share with your former partner, so it’s a good idea to look at all of your shared assets overall when deciding what to do with your pensions.
Do You Have to Share your Pension in Divorce
You don’t have to share your pension in divorce, but it is important to remember that it is likely to be classed as a marital asset. This means your partner may be entitled to a portion of your pension and you theirs.
It’s also important to remember that there are two people involved in every divorce and while it is hard to be fair during what can be an emotional time, it’s important to consider the separation from both sides.
For example, if you worked while your partner stayed at home and raised your children, sharing your pension may be the fairest way of handling things.
In other circumstances, it might make sense for you to keep your own pensions separately.
Whatever you decide, it is always best to make sure your agreements are legally documented so your former partner can’t change their mind years down the line.
If you decide not to share your pensions, you should still make your agreements legally binding by dismissing any pension claims in a Consent Order when considering your other marital assets.
Get Legal Advice
When it comes to something as valuable as your pension, it’s really important that you make the right decision and make sure you both stick to your agreements.
This can be done not only with a Financial Order, but also with expert legal advice from a Divorce Solicitor and a pension expert.
Because pensions can be complicated, it’s hard to know exactly what each of you are entitled to and this could change throughout your lifetime.
Our Divorce Lawyers have years of experience in helping separating couples with their finances, and we can help to work out a fair divorce settlement so you can get the financial security and clean break you deserve.
For initial legal advice call our Family Law and Divorce Solicitors
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Simpson Millar Solicitors are a national law firm with over 500 staff and offices in Billingham, Bristol, Cardiff, Catterick, Lancaster, Leeds, Liverpool, London and Manchester.