Pensions
I am getting divorced - what are my rights?
I am getting divorced and I have no pension fund but my spouse has a pension fund
For a lot of couples going through divorce a pension can become a big issue as a pension can be a considerable capital asset. When the Courts decide how matrimonial assets are split up they have the ability to compensate somebody who did not have a substantial pension pot by giving them more of a share in say the family home than they would otherwise have been entitled to.
In most situations, but of course not all, it is the wife who has a lesser pension pot than her husband. For many types of pension plans it would have been the case that on the husband’s demise the spouse would have received a continual income until their death. On divorce this benefit is lost.
It may also be the case then that somebody does not have enough working life to build up enough pension plans themselves to compensate.
It is important to realise though nobody has an automatic entitlement to a spouse’s pensions once they are into divorce proceedings.
I am getting divorced and I have a pension fund
The Court will look at the facts and figures in each case just because technically people are entitled to, what they believe is half of everything this often may not be the case. It is now possible that Courts will offer a solution known as “offsetting” as a way to settle between the two parties.
Offsetting is seen as a sensible approach but it can be difficult for couples that are older and/or wealthy where retirement benefits might be worth a lot more than other matrimonial assets such as the family home.
If this is the case another approach could be “earmarking”. A Court will award a spouse a percentage of the income due from the pension fund. The main disadvantages to this solution are that if the pensioner dies before retirement the person who has been awarded a part settlement through earmarking will lose their income stream.
Also if a recipient of the earmarking order remarries again they will lose their entitlement to the pension income.
During the last decade pension sharing on divorce was arranged by effectively transferring part of a pension fund into the name of the recipient. This has the advantage of parties being able to have a clear break which is more desirable for many people and allows them to just then get on with the rest of their lives.
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