Pensions & Divorce

Pension entitlements (also called “superannuation”) are usually the main security for a couple’s retirement. Therefore if a couple divorce it is important to consider whether both can be secure in the future. English law allows pensions to be shared (or “split”), or to “earmark” the income (that is to secure a set percentage of the payment).

Because there is such a variety of pensions, including state pensions and the State Earnings Related Pension Scheme (SERPS) as well as the issue of pension freedom, expert guidance is needed to ensure a fair arrangement. Foreign pensions also have to be considered.

Second to the matrimonial home, pensions are often one of the biggest assets in divorce, which is why it is so important to properly consider the most sensible way to split it.

In England, Wales and Northern Ireland, the Courts must take into account both parties’ pensions and pension rights in a divorce scenario. These include state pensions, workplace schemes and the personal pension plans of each party. In Scotland, a more mathematical approach applies; any increase in the value of your pension(s) from the date of marriage to the date of separation will also be considered by the Court when evaluating pension positions.

For a fair pension split, the first step is to find out the values of each party’s pensions. This requires asking your pension provider for a pension valuation, checking your latest annual statement for your pensions’ ‘transfer value’ (the amount you would get if you were to move your pension elsewhere) or, for more complex pensions, getting assistance from a solicitor and pensions actuary.

Current rules stipulate that basic state pensions cannot be split at divorce, although you may be entitled to claim a basic state pension using your ex-partner’s national insurance records. However, upon your remarriage, you will lose this pension entitlement. The additional state pension, which is built up in employment, can be split.

Pensions can be split in three ways:

  • Pension sharing: This allows you to claim for a percentage share of your ex-partner’s pensions, the amount of which is transferred into a pension of your own name.
  • Pension attachment: Otherwise known as ‘earmarking’, you can receive an agreed amount of your ex-partner’s net pension income or lump sum when it starts being paid to them. This option is more favoured by couples closer to retirement age.
  • Pension offsetting: The value of any pensions is offset against other assets, so for example, you receive nothing of your ex-partner’s pensions but keep the family home instead.

In England, Wales and Northern Ireland, only a Court can make a Pension Sharing or Attachment Order, whilst in Scotland, a Pensions Sharing Agreement can be set up outside of Court.

Pension division can be complicated: there are strict time limits, rules as to how agreements are written and the need to liaise with pension trustees, and therefore attaining guidance from a specialist solicitor such as Brookman is strongly recommended.

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Pensions

Pensions - Scenario Analysis Example #1

Mrs M consulted us. She was 52. Her husband was 54 and Chief Executive of an engineering company. He was likely to retire at 60 with a pension of half his final salary. He also had a private pension fund from years earlier. He argued that he had worked hard for his company pension and it was solely entitled to it. He proposed sharing the private pension fund.

Our solution:
We obtained a calculation that to replace half the future company pension benefit with a private pension fund would cost Mrs M £600,000. (This is a calculation called a “transfer value”) If Mrs M was to keep all the benefit she would need not only all the private pension fund but also more to provide an investment income. We settled the matter with Mr M agreeing to consent orders with a pension sharing order giving Mrs M all the private scheme and 25% of the company pension.

What our clients are saying:

‘MK’, London (July 2018)

“To everybody at Brookmans. Thank you so much for finally getting my divorce through. I am delighted that it is all over and thrilled with the outcome. Thank you Henry in particular for rescuing my sanity under intense enemy fire.”

See this client’s original thank you note here.


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Brookman Solicitors

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Chris Mullins 10/12/2018

Henry Brookman and team have been fantastic from initial point of contact. They were able to schedule me a 'free telephone consult' at short notice in order to fit with my travel plans. I have now received sound written legal advice from both UK and Overseas perspective which has given me great reassurance and peace of mind. I am now understanding of the legal journey I am to face and have confidence that his team will be able to support me!

Syeda Rizvi 09/11/2018

I can’t recommend Brookman solicitors enough. I met with Mr Aziz Malik from Brookman solicitors for a case that had an international dimension to it, and found him extremely competent, professional, reassuring and empathetic. Knowing that my case was time sensitive, Mr Aziz was quick to initiate the legal process, kept me updated on the case progress, responded very promptly to all my correspondence, gave very sincere legal advice and addressed all my concerns in a very patient and responsible fashion. He was very involved in the case, and I knew from the get go that my case was in safe hands. Throughout the process, the law firm also kept me posted on the costs of the services I was getting, hence making the process very convenient and transparent for me. The barrister they appointed to represent me at the hearing(s) was equally competent, knowledgeable and articulate. Thanks to Brookman solicitors, the outcome of my case was exactly what I had wished for, and I am beyond delighted. I am extremely grateful to them for their services. Please keep up the good work!

Nir Ozer 07/11/2018

Henry Brookman was very honest and helpful with the professional quick legal service. It's wonderful to know you get a proper advice when needed. I definitely recommend this law firm.

Chris Saunders 26/10/2018

I engaged Brookman Solicitor's on a particularly complex topic related to international divorce. Henry and his team provided excellent support and his expertise was a critical factor in a successful outcome. I would not hesitate in working with this firm again, or recommending them to others.

Petra LP 25/10/2018

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