Family, Matrimonial and Civil Partnerships
Recent research by mutual insurer Royal London indicates that divorcing women lag behind their married counterparts when it comes to pension and property wealth. Royal London is encouraging those going through a divorce to ensure that they properly consider the importance of the pension as an asset and give it the same attention as other significant assets such as the family home.
At Shentons, we regularly assist our clients on the financial elements of a divorce and frequently this means we advise on pension entitlement.
Pensions are regularly the most valuable matrimonial asset after the family home and so it is vital that this asset is properly considered in the course of any divorce. Many clients come to us and advise that they have reached an agreement with their spouse that they will keep their own pensions or that one party has agreed not to make any claim against their spouses’ pension. It is crucial that the client understands the significance of that decision. A younger couple for example, may not consider the importance of that potential income at retirement age or a spouse may not properly consider the exact value to them of the asset they are potentially ignoring.
Pensions can be confusing. Many different schemes have different rules and the specific methods for accurately valuing a pension can be very complicated. This may explain why many people are seemingly willing to forgo examining pensions in any great detail, even if that means potential financial loss to them.
It can be necessary to consider instructing an expert (Actuary) to value the pension. Clients will need to consider what they want to achieve by any potential Pension Sharing Order in the divorce – do they want to have an equal pension fund value with their spouse now or do they want to ensure that each party will have equal income on retirement? An actuary can be instructed to crunch those numbers and advise how best to “share” the pension to achieve that aim. The cost of obtaining the report can be shared between the parties and often they are invaluable to helping the parties consider how best to deal with the pension asset. Our advice remains to consider all assets properly and thoroughly on divorce to help achieve fairness for both parties.