Pensions

It's understandable that you might want to ring fence your pension rights in some way to protect them in a divorce but the reality is that in most cases it isn't possible to do so. More importantly, however, pension sharing will often be the best option for both you and you ex partner. 

If you keep your pension its value will have to be taken into account by "offsetting" it against other assets, which might mean you having to give up all or more of the equity in the family home or cash and investments that you could use immediately to meet your current needs. Having a pension share can also help achieve a clean break so that maintenance doesn't have to be paid for as long to your ex or at all. 

There are two main ways a pension is taken into account in a divorce settlement. Either there will be a formal court order transferring a specific percentage of a pension (up to 100%) from one of you to the other or there will be an unequal split of other assets to compensate the spouse that doesn't have the pension.

Claims for pension sharing will usually be dealt at the time you get divorced as part of the overall divorce financial settlement and order. However, it is possible in some circumstances for a pension sharing order to be made at a later date if it is replacing an earlier maintenance order.

A pension sharing order can be made in favour of either of the spouses or civil partners in divorce or dissolution proceedings for any percentage up to the full value of the pension, but as with the division of other assets on a divorce there is no fixed formula. You may get more of the pensions and less of the investments or business assets or vice versa. 

There are different types of pension and the way of valuing them varies considerably. A standard personal pension will be made up of cash or investments that are likely to be relatively easy to value at any given point. Public sector and final salary schemes are more complex. 

A crucial point to bear in mind is that values change. It's important to use figures that are as up to date as possible and even then there will nearly always be some difference, up or down, between the outcome you're working on in negotiations or court proceedings and what you actually end up with. 

There is no substitute for expert advice from your family lawyer who can then bring in independent financial advisers or an actuary if required. Getting it wrong can be very costly and certainly justifies the fees that you'll be paying to ensure you're protected.