In most relationships, the matrimonial home is the biggest asset and the one that most people consider first in a financial settlement. The next biggest asset is usually the parties’ pensions but one that is too often overlooked. A recent report by Aviva has shown that 15% of divorce couples didn’t even realise that their pension could be included on the divorce settlement and 34% made no claim on their ex-partner’s pension. This has led a lot of people to realise, sometimes too late, that they are significantly worse off in retirement as a result of their divorce.
The parties’ pensions are considered on a financial settlement just the same as any other asset, no matter who it belongs to. Had you remained together the pension would have been available to support both of you in your retirement, not just one of you. In most cases you can claim against all your spouse’s pensions, even if they had fully paid into them before you married.
Sometimes it is simply not worth while making a claim against the pension because the value is so small, but it is always worthwhile making enquiries as to what pensions there are and how much they are worth.
Even if you decide that you don’t wish to have a Pension Order, you can offset your claim against the pension so that you receive more out of another asset. It may be that it is more important to you to ensure that your housing needs and those of the children are met now rather than looking towards your position on retirement. Offsetting your claim against pensions means that you have no, or a smaller, pension claim, instead having more from the other capital assets to allow you to purchase a house. When the children leave home, you can consider selling your home and downsizing, allowing you to invest the balance of any sale proceeds for your retirement. So even if you don’t claim against the pensions now, it is certainly worthwhile including them in negotiations for a financial settlement.
The other option is a Pension Order which can either be a Pension Attachment Orde or a Pension Sharing Oder. A Pension Attachment Order allows you to have part of the lump sum and/or monthly payments from your ex-spouse’s pension. A Pension Sharing Order shares your ex-partner’s pension now so that part of their pension is paid into your own pension fund.
Pensions are a complex area because they are not an asset that are available now but are there for you on your retirement and you need to know how best to deal with that pension. It is always a good idea to have specialist legal advice upon the financial settlement to ensure that you are not missing out on claims against pensions.
By Alison Wilding