Don’t forget about retirement

As divorce lawyers, one of the factors we always consider in a financial settlement will be your pension position.  Unfortunately, a recent report from Scottish Widows has demonstrated how many people do not consider the importance of pensions in divorce.   Just 9% of people they questioned were concerned about staking a claim, despite the fact these funds can be a very valuable asset. Alarmingly, almost three quarters did not discuss pensions during divorce proceedings at all.

This approach has a particular impact on women, who statistically save less into pensions than men.  The study estimates that that divorced women are missing out on some £5bn in pension payments every year.  Almost half of women have no idea what happens to pensions in a divorce or what their options are. Inevitably this must have resulted in some very unfair settlements and must be storing up trouble in years to come.

The two key options available to divide pension benefits in a divorce are: –

  • Pension attachments orders, which earmark a share of any aspect of an existing pension for the non-holding spouse and direct the trustees to pay this share to them on retirement.   There remains only one fund, in which the receiving spouse has an interest.
  •  Pension sharing orders, which physically remove a % of one spouse’s pension and place it in a fund in the other spouse’s name, either in the same scheme or an external “new” scheme.

Of the two, by far the most adopted option are pension sharing orders.  They achieve a true “clean break” between the parties, both of whom are then left with their separate funds to manage as they please.  A pension attachment order carries risks within it – it can be varied and will terminate on the death of the spouse in whose name the pension is, or the remarriage of the spouse who has the benefit of the order.

Our team has extensive experience in handling cases involving all types of pension.  If you need any advice, please get in touch with us.

If you have any queries about this article please contact jonesnickolds on 0203 405 2300 or