Divorce Settlements
Quite often in divorce or dissolution, the pension can be the biggest asset after the family home. This can be split several ways, so it’s worth understanding the options before deciding what’s appropriate for you. The 3 main ways that your legal representative will be speaking to you about when considering pensions and divorce will be as follows:
1. Off-setting
A more increasingly common way is through off-setting. This is where the whole pension is taken by one spouse, and the other spouse is then given other assets, such as property or cash to off-set the value of the pension.
2. Earmarking
The next method (although much less common now a days) is earmarking which is when a portion of a pension fund is attributed or ‘earmarked’ for the divorcee for future use. This can only be accessed when the ex-spouse who owns the fund crystallises their benefits.
3. Pension sharing
The final method is pension sharing. This allows a pension fund to be split between the ex-spouses. The divorcee is allocated a proportion of their ex-spouse’s pension savings and they can either take the money and place it into another appropriate scheme or they may be given an option to have their own scheme with the existing provider.
If you have been advised by your legal representative to elect a pension to receive a pension sharing order as part of the divorce settlement, we can discuss this and advise you on an appropriate pension scheme to transfer the funds into.
