Financial proceedings following on from a divorce can often be complicated, especially if there are Pensions issues.   The issue of Pension provision should be taken seriously.

For those getting divorced retirement can seem a distant prospect and so the parties may concentrate on more immediate needs, for example where they are going to live in the future. It is important to have an overall picture and not simply trade away pension rights in exchange for capital or a home at the time of the divorce.

If the parties own a large house with a significant amount of equity, a consideration could be to downsize at the time of the divorce to provide some liquid capital to buy alternative housing and also couple this with some Pension provision which will help for old age.

The State Pension changed in April 2016.  The changes are complex and the “Single Tier” Pension is subject to all kinds of complicated adjustments, depending upon how many years contribution have been made.

Until April 2016 it was possible for some spouses to substitute their partner’s National Insurance Contributions to give them better pension provision.  This has been removed.

An essential consideration when negotiating is to obtain full and frank disclosure of all pensions. Very often a person is reluctant to disclose or will produce out of date or incorrect information.

Pension disclosure normally comes in the form of a cash equivalent transfer value (CETV) also known as a CEV or CE. Sometimes litigants obtain a Pension Illustration which will tell them the amount of any lump sum or pension they may receive in the future but this information is insufficient and will not provide a valuation of the pension.

Final Salary or Career Average Salary Pensions have a guaranteed pension benefit at the end of the day. The CETV can be potentially misleading as the value will be in the pension itself and the benefits it will bestow in due course.

With a Defined Contribution or Personal Pension it may be acceptable to rely upon the CETV if say the value is not significant and/or if there is a very short marriage. Similar considerations will apply if the parties’ ages are roughly the same and the parties’ health and smoker status are the same.

An Independent Financial Advisor who specialises in Pensions is able to advise on what approach should be taken in relation to the pensions and whether the CETV should be relied on.   This does of course come with a cost and professional advice should always be taken as to whether this is proportionate in relation to the value of the potential claim.

In simple terms, the moral of the story is always firstly to obtain the pension valuation and then seek specialist legal and financial advice as to the best way forward. Once a Financial Order has been made there are only very limited circumstances in which it can be adjusted.

If you wish to speak to one of our Family, Children and Divorce team about any aspects of Family Law.   Contact either our Boston, Grantham, Spalding, Sleaford, Lincoln or Newark offices.

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