At Shentons, we regularly advise clients on the financial consequences of divorce, and pensions frequently form a central part of those discussions. They're not the boring afterthought they might seem at first glance.
In many cases, a pension is one of the most valuable matrimonial assets, second only to the family home. Despite this, people often underestimate or overlook its importance. Some clients say they’ve agreed to keep their own pensions, or that one person won’t make a claim on the other’s. Before taking this step, it is essential to understand the long-term financial impact of that decision.
For younger couples, pensions can feel like something far off, so they can be easy to ignore. In other cases, one person simply doesn’t realise how much the pension they’re giving up is actually worth. But these choices can make a big difference to financial security later in life.
Pensions can be tricky. Different schemes have different rules, and working out their true value isn’t always straightforward. As a result, people may avoid examining pensions in detail during divorce negotiations, even when doing so may place them at a financial disadvantage.
Instructing an actuary to undertake a pension report provides clarity and reassurance. An actuary can value the pension and help clients decide what they want to achieve through a Pension Sharing Order. For example, clients may wish to equalise pension fund values at the time of divorce, or they may prefer to ensure each party receives a similar income in retirement. An actuary can assess the options and advise on how to structure a fair and effective pension share.
Our advice is straightforward. When dealing with divorce, consider all assets carefully and thoroughly. Taking the time to understand pensions can help achieve a fair outcome and provide greater financial security for the future.
If you are unsure how pensions may affect your divorce settlement, contact us for tailored advice. We’re here to help.
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