Reaching An Outcome

It is important to remember that the pension benefits are only one part of the overall assets of the marriage, and are generally not divided in isolation to the other assets.

As part of the overall settlement the pensions are dealt with by either offsetting, attachment or sharing. For more information on these options then please see ‘What are the options?’

Once all the financial information has been gathered and exchanged, and this may include a pensions report, a decision must be reached as to how all the assets are to be split to meet the parties needs and objectives.

Depending on whether are using mediation, the collaborative process or the Court process to achieve an overall financial outcome on your divorce may dictate how you reach an outcome in respect of the pension benefit.

If it is not possible for you to come to a financial agreement by consent then it will be necessary to issue court proceedings, with ultimately a judge making an order.

It is strongly recommended that professional legal advice is taken to consider the impact of this including the potential cost and timescales.

Whichever method is used – mediation, collaborative or court – it is important to remember that only a court order can achieve the division of pension assets by the awarding of either a pension sharing order or a pension attachment order.

The consent/court order will need to contain the correct provisions for there to be a pension order and be accompanied by the appropriate pension sharing annex(es) or pension attachment annex(es).

If you are self-represented and/or mediating it may be necessary to appoint a family lawyer to assist with the preparation of the necessary documentation.

A pension sharing order becomes effective on the ‘Transfer Day’ which is 28 days after the court order is issued or the date of the decree absolute if later.

Any benefits accrued by the pension member after the Transfer Day are not included in the settlement.

So, whilst any benefits accrued after the court orders have been made will be excluded, the final benefits to be divided are yet to be valued and not as per the initial disclosure.

If a pension report has been prepared this will probably give several options and parameters to consider.

In deciding how to divide the pensions it may be appropriate to seek guidance from a pension specialist / financial planner to

• help explain the pension report, if one was prepared, and answer any queries you may have, this may be either face-to-face or via telephone or video conference
• discuss the options for implementation, if necessary
• create a cash flow model to consider the overall outcome of various scenarios to consider the financial impact. This may include
  • savings
  • pensions
  • housing
  • investments
  • income, including maintenance
  • need for life assurance to protect yourself and your dependents

A cash flow model allows you to consider the impact of future events to help understand the effect on any proposed settlement. This may include the financial impact of

• possible downsizing the matrimonial home in the future, such as when the children leave home
• future employment income
• future pension income which may accumulate in the remaining period to retirement
• the effect of achieving some more immediate financial goals, i.e. replacing car making home improvements etc
• taking benefits earlier or later than anticipated within a pensions report
• possible future inheritances

Whilst this guide focuses on pension issues, if the settlement involves other financial assets and assistance may be required on matters such as

• capital gains tax
• changes to trusts
• assignment of life assurance policies or the need for life assurance to protect income streams on death or ill-health
• changes to mortgages