Clare Curran, Partner in charge of the Matrimonial Department at Worthingtons Solicitors discusses how pensions are likely to be dealt with on divorce.
A pension is frequently one of a number of assets which requires to be resolved as part of an overall matrimonial settlement after the breakdown of a marriage. There are various ways in which the division of the value of a pension may occur, and how much is shared will depend on all the circumstances of the case. Of particular significance is the length of the marriage and the proportion of the pension which has been accrued during that time. If one or both of the parties has a pension or a number of pensions which are of a significant value, the parties may need to consider getting a pensions expert to provide an analysis of the value of the schemes and the impact of sharing same. A specialist matrimonial solicitor will advise whether such a report will be needed.
One common way of dealing with a pension would be to ‘off set’ one party’s interest in the other party’s pension using the value of other assets. This allows the pension to remain in tact with the spouse who earned it. In return that spouse will forego or accept a reduction in their interest in other matrimonial assets, such as the matrimonial home or other savings and investments, up to an agreed or specified value.
Another alternative common option would be to deal with the pensions by way of a Pension Sharing Order, which is an Order obtained from the court, which has the effect of splitting the pension scheme on the basis of an agreed or specified percentage; thereafter each party can decide what to do with their share ie whether to transfer it to a new or existing scheme or whether to retain it with the original provider.
A less common route would be to deal with the pension by way of an ‘attachment order’ which specifies that a pension scheme member’s former spouse is entitled to an agreed or specified percentage of the pension from the point of retirement until they die. This option is rare given the limited security that such an order gives to the former spouse and the fact that it results in an ongoing financial link being maintained between the parties, as opposed to a ‘clean break’, which is often not desirable.
If both parties are willing, issues pertaining to the division of pensions and all other related financial matters can be resolved constructively, without huge legal costs being incurred and without years of acrimonious litigation. The right legal, and other expert advice, should save you money, time and assist you in achieving your objectives both now and in terms of financial planning for the future.
Clare Curran is Partner in charge of the matrimonial department at Worthingtons Solicitors who have offices in Belfast and Newtownards and serve clients throughout Northern Ireland. She can be contacted on firstname.lastname@example.org or 028 91811538.