Splitting A Pension And Divorce:

During a separation, splitting a pension probably won’t be at the forefront of your mind. Yet, most UK pensions can be shared in the event of divorce. There are, of course, exceptions to the rule. So, if you’re the Prime Minister, the Lord Chancellor, the Parliamentary Speaker, or the First Lord of the Treasury, this blog is not for you – but we promise this will at least make an interesting read!

Why Might Pension Sharing be a good option in divorce?

 

splitting a pension - why it might be a good option

Aside from the family home, a pension is often the largest asset people have. Yet, it’s not something that people necessarily think of as ‘up for discussion’ in their divorce. But, there are times when splitting a pension can be hugely beneficial in ensuring a better financial settlement for all involved.

What happens when pensions are shared?

 

how does it work?

How your pension is shared will depend on several factors.  Your specific circumstances will need to be factored in, as will the type of pension you have. Interestingly, the person who advises on the split for you will also have a major bearing on this. And, we say this quite literally because everyone seems to do it differently. That includes divorce lawyers and actuaries, right through to us as financial advisers, and even judges!  

Who should handle a pension share? 

 

who can help with splitting a pension

Naturally, we would say ‘us!’ But whoever you use, be sure it is someone with vast experience of splitting pensions in divorce. They will need to be familiar with the Pensions Advisory Group guide on how pensions should be treated in divorce cases. Nor should you be afraid to ask the person whether they have read these guides. Any reputable adviser will have done so, and will only be glad you have checked.

You can also refer to a body called Resolution if you are looking for specialists in splitting pensions. Resolution’s Specialist Accreditation Scheme recognises professionals who demonstrate excellence in family law as well as in their specific areas of expertise. So, looking for a Resolution accredited financial adviser is worth considering if you’re thinking of splitting a pension. 

Are there any kinds of pensions that cannot be shared?

 

what pensions cannot be shared?

State pensions cannot be shared, and neither can pensions inherited on death. Pensions that already have an earmarking order due to a previous divorce are also not eligible for sharing.

How can pensions affect my divorce settlement?

 

how can a settlement benefit from splitting a pension

Pensions are designed to provide an income during retirement. So, they can’t be viewed or used in the same way as a savings account might be. Complicated calculations need to be factored in. Only then can a fair overview of your assets be determined during a divorce, of which your pension is a part. It may well be that taking a larger share of the family home, for example, instead of a share of the pension pot, leaves you worse off. So, it’s always worth asking a professional about pension splitting, to see whether it might benefit you in your divorce.  

At Lewis Brownlee Financial Services, we are proud to have a Resolution-accredited adviser as part of the team. So, if you would like some help achieving a financial settlement that is right for you and your family, do get in touch. We’d be happy to help! 

Resolution accredited advisers

 

Written by Alex Welsh

Alex is a Resolution-accredited, Chartered financial adviser. Having joined the firm in 2012, he has extensive knowledge of all areas of financial planning.

Want to Speak to a Financial Adviser?

As always, if you would like to speak to one of our reputable, independent financial advisers, please do call us on 01243 767 469. Alternatively, you can email us from our contact page, and an adviser will be in touch.