Pension benefits can be one of the largest matrimonial assets and although you may feel that the investments are not easily accessible and are something for the future, the value of those investments sometimes affects the amount of capital that one party receives when they divorce.
There are different types of pensions and some are more valuable than others. The way in which they are valued also differs and some pensions offer more benefits than others e.g. the right to retire early.
From April 2015 there will be a lot more flexibility in the way in which pension investment can be accessed for over 55’s. Those who once had no prospect of accessing cash when divorcing, will be able to draw investment from pension more easily and flexibly. 25% of the pension pot will remain tax free and those who want to withdraw the investment by way of cash will be able to do so as they see fit.
The starting point for valuing pensions in divorce is to obtain the cash equivalent value (CEV). If your pension is already in payment and you are receiving income from it, the pension is more likely to be regarded simply as an income stream.
A CEV can take some months to prepare and involves a detailed actuarial calculation. A statement of benefits is also useful to obtain, giving an indication of the benefits that can be taken at retirement and upon death, based upon contributions made during the marriage.
If you had a pension prior to marriage either wholly or in part, it is helpful to obtain a statement from the pension trustees which includes the date of commencement of the scheme to support any issues you may have with having acquired the investment prior to marriage.
There are two principal ways of dealing with pensions upon divorce. The first is to even out the value of pension benefits by way of a pension sharing order and the other is to accept or offer more capital e.g. one person keeps the house and the other the pensions. Age is an important factor and equalisation of income streams after retirement may be relevant. This may involve an expert opinion from an actuary.
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If you’d like to speak to one of our expert solicitors about your pension or anything else relating to divorce, give us a call on 0113 201 4904 or complete our online enquiry form for some initial free advice. We offer our services nationally and internationally and can meet you in person or communicate with you by phone or online.Download our free guide to the divorce process Complete our ‘Application for Divorce’ form