When a relationship comes to an end, your main financial concerns during separation are likely to be centred around property and savings, but many people fail to consider the effects of divorce on their pension. Pensions can form part of your assets during a financial settlement, which means your pension benefits after retirement may end up being different from what you expected.
If you are entering into separation, it’s essential to meet with a solicitor to discuss your options and consider how your assets and liabilities might be affected, including your retirement income.
In England, your pension is valued at the date of separation or dissolution when included in a financial settlement. You and your ex will need to consider how you want to split your pension benefits whether you go to court or use an alternative method of dispute resolution like mediation or arbitration.
There are three options for dividing retirement income:
- Pension sharing – splitting your pension into two pots at the point of separation.
- Pension offsetting – retaining your own pension benefits but adjusting the division of other assets to balance the financial settlement accordingly.
- Pension earmarking – making arrangements for assigning a portion of one party’s pension benefits to the other person in the future – either from your pension income or the pension commencement lump sum.
Each situation is different and it’s essential to seek advice from an experienced family solicitor before you make a decision about pension division. For example there may be circumstances where pension offsetting is impractical if there are no assets of respective value, while pension earmarking can cause issues if you die before you reach retirement, retire early, or stop contributing to your pension.
For guidance and support on divorce, separation and dividing your pension, get in touch with the family law solicitors at Frances Lindsay & Co. Let us take the weight off your shoulders and help you find the right method of dispute resolution for your situation.Tags: divorce thames valley, pensions and divorce