Pensions can be substantial assets of a marriage and often the crucial element of financial negotiations; however exactly what happens to a pension can vary depending on a number of factors. It is unsurprising then, that many people are unsure as to whether their pension would be affected on a divorce, and if so, by how much.

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Our expert family lawyers can advise you on the potential effect on your pensions, negotiations and settlements. Here is a brief explanation of what could happen to pensions on the event of a divorce:

Valuing a Pension

In order to value a pension, a prescribed method must be used by the pension provider to calculate the Cash Equivalent Transfer Value (CETV). This is the starting point for the basis on which decisions would be made when considering the pension.

Pension Sharing Order

A court could order that a certain percentage of one parties’ be transferred to the spouse following pronouncement of the decree absolute of divorce. This would mean that in the event of the divorce, the spouse with the pension would lose a certain percentage of their pension, and that amount would now be part of the receiving spouse’s pension provision. There are some pensions, such as the basic state pension, that cannot be shared.

Pension Attachment Order

A court could also order that the pension provider pays all or part of the pension when it becomes payable, to the receiving spouse. This would mean that the pension remains in the name of the spouse holding the pension, but becomes payable to the receiving spouse. Such orders are unusual.

What if we both have pensions?

The value of a pension (held by either one or both parties), will form part of the marital assets. Essentially it will all form part of the pot of assets held by both parties, and then be divided. The starting point of this division could be 50/50, but there are many factors which could affect this balance. If all other assets are equal, but one party holds a substantially greater pension than the other, it may be deemed fair in the circumstances to equalise the pensions. It may also be possible to keep your pension unaffected, but making the amount up elsewhere; for example by paying a greater lump sum to the other party or by them receiving a larger proportion of the value of the former matrimonial home. This is often referred to as “off setting”.

If you would like advice on the effect of divorce on your pensions, please call our expert family lawyers on 033 03001103, who will be able to advise you on your own personal circumstances.

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