How do I protect my pension?

Separation from your spouse or partner can be a very difficult and emotional time. This is especially the case when there are financial matters to resolve. For a lot of clients, aside from the former matrimonial home, their pensions are often their most significant asset. As family law specialist solicitors we are often asked the inevitable question ……. ‘how do I protect my pension?’

There are three main options available to deal with a pension within a divorce. These include pension offsetting, pension sharing and pension attachments.

Pension Offsetting

Pension offsetting is often the preferred choice for those individuals who are seeking to retain their larger pension rights intact.  This allows the individual to retain their pension in its entirety by compensating the other party for the loss of interest of their spouses pension by giving that party a larger share of the other matrimonial assets available as part of the settlement.  This option should be considered taking into account the value of the pension and other assets.

Pension Sharing

Pension sharing is where part of the pension is taken and then paid into a separate pension scheme in the other party’s own name.  Again a number of factors should be considered in relation to this option. One of these factors is the amount of years paid into the pension scheme.  This is because once the pension sharing order has been implemented, the future contributions made by you would then only contribute towards your remaining pension scheme, and therefore dependant on the amount of time you have paid into your pension scheme, it may enable you to increase your pension pot again before retirement.

Pension Attachment Order

A pension attachment order allows a court to order the payment of maintenance once the pension is in payment.  Once the pension is in payment, the other party is paid directly by the scheme trustees.  The advantage for this option is that it would usually stop if the other party was to remarry. The disadvantages include you as the scheme member, remain liable/chargeable for income tax on the whole amount and also any contributions made by you, post divorce, will increase the amount of money that your ex-husband/wife will receive when this is split at the date of payment.

Jane Jacques, a solicitor within the Family Department at Poole Alcock Solicitors, who is recommended by the Police Federation, said “There are many advantages/disadvantages to each of the pension options available and a number of factors need to be considered on a case by case basis.  The option which is most suitable to an individual will depend on their personal circumstances and the other matrimonial assets available”.

We have Family Solicitors at all of our offices across Cheshire. You can arrange an appointment by completing this form. Alternatively, see our Divorce and Family services. If you’re cohabiting and would like some specific advice please contact our leading family lawyers.