Pension Sharing – know your facts
When entering into a divorce, pensions are taken in to account as a source of income.
There are 3 ways of pension sharing:
- Pension attachment
- Pension Sharing
- Offsetting
There are advantages and disadvantages for each option.
We need to be able to truly understand both the capital and income benefits available to you from the pension scheme. If you want to talk to us about pensions sharing, we’ll need the following information:
- Details from the pension provider – basic disclosure includes the scheme booklet and early retirement and commutation terms, Cash Equivalent Transfer Value (CETV), a blank page 10 of Form E completed by the pension provider, obtain confirmation regarding implementation and an estimation of the costs involved in implementation.
- You may need to consider seeking the advice of an appropriately qualified specialist depending on the complexity of the issues and the costs involved i.e. when necessary and proportionate.
Things to be considered:
- Uniformed service pension?
- Is the pension a defined contribution or defined benefits one?
- Does the defined contributions pension have a guaranteed annuity rate?
- Is the defined contributions pension a simple money market or self-invested personal pension?
- Is the defined benefits pension public or private?
- Is the defined benefit pension index-linked?
- Does the defined benefit pension have an internal and/or external transfer option?
- How is the CETV calculated?
- Age of retirement.
- The benefits gap i.e. the deferral of the receipt of benefit until retirement age.
- Is the lump sum commutable?
- Is one party currently paying spousal or child maintenance or perhaps toward the costs of a second household?
- Should the application for a pension share be adjourned?
- Is the pension already in payment?
- Is there an annual allowance tax charge?
- Is there a scheme pay feature?
- Is the pension above the lifetime allowance?
- Are there any pension freedoms e.g. flexi-access drawdown?
- Length of marriage.
- Number of children.
- Medical conditions/life expectancy.
It is important to not automatically write off pensions, even if they are modest. It is worthwhile to explore them and fully understand what they can offer you, as it could either make you or save you money.
To consider and discuss your options or for more information please contact our Family Department on 0800 160 10 10.
