Pensions on Divorce: Key Points

Importance of Pensions in Divorce

• Pensions can be a significant asset in divorce
• Often overlooked but crucial for future financial security
• Can be shared on divorce, regardless of whose name they’re in
• Ignoring pensions can lead to unfair outcomes
• Consider both current and future needs

Types of Pensions

1. State Pension: Basic and Additional
2. Defined Contribution: Based on contributions and investment performance
3. Defined Benefit: Based on salary and length of service
4. Personal Pensions: Self-arranged private pensions
5. Workplace Pensions: Arranged through employers
6. Public Sector Pensions: Often defined benefit schemes

Valuing Pensions

• Cash Equivalent (CE) is the starting point for valuation
• CE may not reflect true value of pension benefits
• Expert advice often needed for accurate valuation
• Consider future value and additional benefits
• Obtain valuations for all pensions, including State Pension

Options for Dealing with Pensions

1. Pension Sharing: Splitting pension into two separate pots
2. Pension Offsetting: Trading pension rights for other assets
3. Pension Attachment: Directing part of pension to ex-spouse
4. Deferred Pension Sharing: Delaying implementation
5. Pension Equalisation: Aiming for equal income in retirement
6. Leave pensions untouched: May be appropriate in some cases

Key Considerations

• Seek expert advice, especially for complex cases
• Consider long-term financial security, not just immediate needs
• Be aware of tax implications of pension decisions
• Understand the impact of pension sharing on retirement income
• Consider the effect of new relationships on pension arrangements
• Ensure all agreements are made legally binding through court orders
• Review and update your will after divorce