Pensions & Financial Planning
Pensions are often the most difficult asset for parties to agree on when attempting to reach a financial settlement, which is made more complicated by the various types of pension policies and the various ways pensions can be dealt with within a financial settlement.
The first step, as with all assets, is to ascertain the value. All parties are required to request a CE Value from their pension provider. This is a Case Equivalent value and is used to calculate a notional value that is used when negotiating how to divide the matrimonial assets.
In certain cases, where there are a number of pensions, the pensions are in payment or there are other complicating factors the CE Value is not sufficient to enable a full understanding of the pensions assets, in this situation an Actuary is required. Actuaries can provide a detailed report on the pension funds, which give a better understand of the assets available either now or in the future.
Matrimonial asset, non-matrimonial asset or both?
It is often argued that some or all of the pension assets were accrued prior to the marriage or after the parties separated. It is often the case that there are not enough assets to go around to meet all the parties needs to be able to argue that certain assets should be excluded when matters become more complicated. This is because the other party can try and argue that certain assets should not be consolidated as matrimonial assets.
If successful in arguing that a certain proportion of the pension assets should be considered as a non-matrimonial asset, the court may accept that this should be excluded from the pot thus reducing the amount of pension that could potentially be shared between the parties.
Pension Sharing or Pension Attachment Order?
The court can make either a Pension Sharing Orders or a Pension Attachment Orders when arranging the financial remedy.
The Pension Sharing Order is the most commonly used order and this specifies a specific proportion of the pension that should be taken from the pension holder’s policy and moved to a new policy in the name of the other spouse. This reduces the value of the policy holders pension and creates a new pension for the spouse, which is then in the spouse’s complete control.
Once the policy becomes payable, the Pension Attachment Order, orders the pension provider to pay a specified portion of the pension to the other spouse. Compared to a Pension Sharing Order this is less attractive to the receiving spouse as there is no control over the policy as it is not in their name.
It is often the case that the holder of a pension wishes to retain it in full to avoid a Pension Sharing or Pension Attachment Order. In order to achieve this they can accept a lesser sum of the other capital assets and the other party receives a higher proportion but without receiving anything from the pension. This comes with complications as pensions assets are not easily valued as an equivalent to ready cash assets but is often a popular option within financial negotiations.
If court proceedings have not yet started and an agreement is reached in respect of the pensions (along with the other assets) we can assist you in drafting a Consent Order. This is filed with the court to ensure that your agreement is legally binding and enforceable. We can also assist you in drafting the relevant forms (e.g. Pension Sharing Annex) which the Pension Company requires to effect the changes in the pension policy if your agreement provides for that.
It is important that when going through a marriage breakdown and negotiating a financial settlement, you receive independent financial advice from a qualified Financial Adviser who can assist you in understanding the implications of the potential settlement and plan for your future. It is particularly important to receive advice if there are pensions involved and you are considering a Pension Sharing Order.
If you require advice and help about Pensions and Financial Planning when seperating or divorcing or you would like to discuss further how Hunt & Coombs can help you with any other area of family law or divorce please contact our Family Law Servcies & Divorce Team on:
- Peterborough 01733 882800
- Huntingdon 01480 411224
- Oundle 01832 273506
- St Neots 01480 702207
- Cambridge 01223 463183
or email: email@example.com.