Pensions, particularly state pensions, are often one of the most valuable assets in a divorce and should not be overlooked. The difference a payment of £20 per week can make in a settlement case can make a significant difference and a PODE report should be obtained.
Our job is to gather the necessary information to ascertain if a pension sharing order should be sought from the court. Whilst ADR, especially mediation, is always considered a starting point for separating couples, it is important to note that a court order is required to ‘share a pension’.
There are a wealth of factors to consider when advising as to pension sharing, including looking at whether there are annual allowances, lifetime allowances, national insurance contributions, and guarantee annuity rates to name but a few.
The starting point for us is to gather certain information about the chronology of the relationship and map out when parties obtained pensions, received any cash values from these pensions, and whether any associated payment plans, or schemes are attached to the pensions. We can then proceed to identify any gaps where a party did not have pensions and explore their financial circumstances at that stage in their relationship. From these facts we can discern the extent of equality in the pension portfolios of each party. We can then ascertain if the instruction of a pension evaluation expert is required to provide a full report to consider a fair offsetting valuation to achieve a clean break where possible for clients.
It is also important to obtain from clients a full transfer pack as to pension evaluations and transfer values; a single page report overview is insufficient. There may be schemes such as the defined benefit scheme attached to the pension and again, full information is required to consider the cash equivalent transfer value forecast. We need to understand any guarantees and inflation rates attached to any schemes the client’s pension is attached to.
We also need to obtain a full medical history of the parties as this will affect calculations as to the pension’s forecast, pay-outs etc. The way taking income from the pensions also needs to be considered. For instance, there are different types of annuity and guarantee payments can be added to the annuity. Other ways to take income are by setting up a scheme pension and giving money to a life assurance company with the intention to later convert into a cash payment.
In conclusion, pensions are often overlooked as an important asset to put into the matrimonial pot for division generally because they are complex, misunderstood, and difficult to navigate.
We can help analyse this asset and work with pension experts whose costs for analysis are reasonable and reports can be turned around within 3 weeks. Reaching a financial settlement is a difficult and often painful exercise. We appreciate and understand this and are local solicitors here to help.
By Suezanne King