Overview of the approaches available to the court
There are currently 3 approaches that can be used by the court for awarding a proportion of your pension to a former spouse/civil partner on divorce or dissolution. These are known as:
- Pension Offsetting
- Pension Earmarking
- Pension Sharing
In the UK, there are two different legal processes dependent on where the divorce or dissolution takes place:
- The courts of England, Wales and Northern Ireland
- The courts of Scotland
As a result, there could be six combinations for handling your divorce or dissolution. The 1st decision for you, your solicitor and the other parties concerned in the divorce or dissolution proceedings is to decide which one of these combinations applies to you.
It'll then be necessary to agree by negotiation, mediation, or decided for by the court what proportion of your pensions are to be shared between the parties concerned the divorce or dissolution.
Pension Offsetting
With offsetting, the court could decide to offset the value of your pension against other monetary assets. The concept behind an offset is that the spouse/civil partner with the larger pension benefits will accept a smaller chunk of the other family assets to balance out the value of their pension.
Pension Earmarking
This was introduced for divorce proceedings from 1st July 1996 in England, Wales and Northern Ireland. It implies that a portion of your pension (including lump sums on retirement and death) is reserved or earmarked for your previous spouse or civil partner. Earmarking was introduced in Scotland from 19th August 1996 but for lump sums, but not for pensions.
Pension Sharing
Since December 2000 divorcing couples have been able to achieve a financial 'clean break ' of the pension rights they have built up. This split is called 'pension sharing'. It allows an instant splitting of your pension benefit by transferring part of your pension to the pension plan of your previous spouse or civil partner.
There are currently 3 approaches that can be used by the court for awarding a proportion of your pension to a former spouse/civil partner on divorce or dissolution. These are known as:
- Pension Offsetting
- Pension Earmarking
- Pension Sharing
In the UK, there are two different legal processes dependent on where the divorce or dissolution takes place:
- The courts of England, Wales and Northern Ireland
- The courts of Scotland
As a result, there could be six combinations for handling your divorce or dissolution. The 1st decision for you, your solicitor and the other parties concerned in the divorce or dissolution proceedings is to decide which one of these combinations applies to you.
It'll then be necessary to agree by negotiation, mediation, or decided for by the court what proportion of your pensions are to be shared between the parties concerned the divorce or dissolution.
Pension Offsetting
With offsetting, the court could decide to offset the value of your pension against other monetary assets. The concept behind an offset is that the spouse/civil partner with the larger pension benefits will accept a smaller chunk of the other family assets to balance out the value of their pension.
Pension Earmarking
This was introduced for divorce proceedings from 1st July 1996 in England, Wales and Northern Ireland. It implies that a portion of your pension (including lump sums on retirement and death) is reserved or earmarked for your previous spouse or civil partner. Earmarking was introduced in Scotland from 19th August 1996 but for lump sums, but not for pensions.
Pension Sharing
Since December 2000 divorcing couples have been able to achieve a financial 'clean break ' of the pension rights they have built up. This split is called 'pension sharing'. It allows an instant splitting of your pension benefit by transferring part of your pension to the pension plan of your previous spouse or civil partner.
About the Author:
Information thanks to Adviser Hub. If you want to know a lot more about the topic of ' divorce and pension' or need help with your pension valuation it is advisable to seek advice from a qualified pensions adviser.
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