Pensions on divorce – do I need a report?
Pensions are a common issue that can come up when trying to resolve matrimonial finances on divorce. Often people want to split their pensions equally or they want to offset one spouse’s claim on the other’s pension by giving them a higher share of a different matrimonial asset such as savings or equity in a property.
However it is rare that 2 pensions are alike. This is especially true if one spouse has worked for the NHS, the Council, the police or the armed forces. As a result your solicitor may tell you that you should get a report on the pensions in your case and how they should be shared between you and your spouse. This is because your solicitor is a legal expert and not a financial one.
The way that people often decided to share their pensions was to look at the capital value of each pension, often known as a CEV (cash equivalent value). However because pensions produce an income that is taxed rather than producing a single simple lump sum the Court’s view has moved away from that approach.
Now the Court will look at attempting to balance the parties pensionable income. This often means equalising but not always. Solicitors are not qualified to undertake those calculations.
This is further complicated where parties want to offset one spouse’s claim with a different asset. A pound in a pension is not the same as a pound in a property or a bank account due to the tax implications. As a result you cannot treat them as a like for like.
Often the spouse with the higher pension provision may want to ringfence any pre-matrimonial contributions however recent case law is clear that if the other spouse has a ‘need’ for pension provision then this overwhelms any attempt to ringfence until that need can be met.
The higher the value of the pension, the higher the number of pensions in a case and the complexity of the funds themselves all increase the likelihood of an expert report being required. Whilst some people understandably wish to keep their costs down and refuse to have a report should they choose not to, against their legal advice, then they could be settling for a pension share that could leave them severely out of pocket in retirement. Pension sharing orders cannot be varied once made so it is important to get it right the first time.
Here at Watson Thomas we can advise as to when you do and do not need an expert report and liaise with the necessary experts for you so that you can make decisions about your matrimonial finances fully informed.
Watson Thomas Solicitors have offices in Fleet, Guildford, Bracknell, Camberley, Farnborough and Woking.
Watson Thomas are a dedicated team of Family Lawyers who specialise in all aspects of family law. If you have any questions regarding resolving matrimonial issues during divorce please do get in touch.
Our staff can work from home and access all systems so even if all are required to self-isolate this will not affect the day-to-day running of your case. We can also hold appointments via telephone and video conferencing, as needs be, to ensure that your service is not interrupted.
If you would like to discuss your current situation with an expert family lawyer, please call us on 0800 488 0218.