specialises in giving advice and help on pensions to family
law solicitors who deal with members of the public who are
We do not advise the public directly but any member of
the public reading this should find it helpful to prepare for
instructing a solicitor and, if thought appropriate, to ask
the solicitor if actuarial advice would be advisable.
Your pension rights are important
pension can be more valuable than your house.
In 1999 the law changed.
It now says; when a married couple divorce and divide
their finances, they MUST take the pension into account.
It is important to keep your rights to your or your
husband's pension, so that you have an income of your own when
you retire. The role of the state in providing an old age
pension is reducing. More
and more you are expected to look after yourself.
assumes 'you' are the wife but the law applies equally to the
What happens to a pension at divorce?
The pension is
part of your finances whether it belongs to you or your
husband. It MUST
be considered in all cases of divorce.
There are three ways you can sort out your pension.
The court looks at
the couple's finances as at the date of separation.
It can compensate a wife for the loss of pension rights
- for example, the wife might keep the house and the husband
would then keep his pension. However, offsetting will depend
on what other assets you and your husband have.
This is new since
1st December 2000. The
pension can be shared. The
court can order the pension scheme to take some of the
husband's pension rights away and make them over to the wife.
The wife gets her own pension rights.
These are separate from her husband's.
Attachment/ Earmarking Order
This is almost
never used in Scotland. The
court can order the pension scheme to pay part of the
husband's death benefit or lump sum in retirement direct to
his wife. An
order cannot be made in respect of pension payments. The wife remains dependent on the husband.
She has to wait for him to die or retire before she
gets her share. If no lump sum is taken on retirement the
earmarking order will fail.
On the whole it is normally better to use a pension
Pension sharing - what are the benefits?
A pension sharing
order in your favour means you will have a pension of your
own. It doesn't
matter if your husband dies, or when he retires.
If you are able to place your new pension share in a
totally new pension scheme, you can choose when you wish to
retire subject to any restrictions imposed by legislation.
If you remarry after this divorce it will not affect a
pension sharing order. You can choose whom you want to receive the benefits of your
new pension rights in case you die before retirement. If you marry again, your new husband may receive a
widower’s benefit on your death.
After the court
order your husband cannot go back to court to change the
amount of the pension share.
Your new pension may allow you to take out a lump sum
when you retire and you won't have to pay tax on this sum.
However, you do have to pay income tax on the monthly
income you get from the pension when you retire.
Once you have started your new pension you may be able
to continue to build it up yourself.
Who sorts out the pension rights?
Experts can put a
value on a pension, just as an estate agent or professional
surveyor can put a value on a property.
The pension scheme can tell you something called the
CETV (Cash Equivalent Transfer Value). Quite often there are
mistakes in the calculations or the scheme administrators have
not used the correct information.
An actuary is a
pensions specialist. Cases
involving pensions are a very complex business.
An actuary can make sure it's done correctly and all
the issues are taken into account. He
will also advise as to whether it is in your interest to raise
the issue of any value that you or your spouse may have in the
Earnings Related Pension (SERPS).
If the value of
the CETV were large – say £20,000 or more, it would
probably be advisable for your solicitor to consider having
the figure checked by an actuary.
This is particularly the case for members of the
uniformed services and where the pension is in payment or
there has been a long gap between the date of separation and
the date the CETV is calculated.
The final stage,
if a pension share has been agreed, is the implementation of
the pension sharing order.
Again in Scotland, especially if there is going to be a
long gap between the date of separation and the date of
implementation, an actuary can indicate the likely outcome of
various possible methods of implementation.