When a marriage breaks down, most people focus on the family home or immediate finances.
Yet pensions are often the largest asset of all and one of the easiest to overlook. We regularly see how vital it is to understand what happens to pensions in a divorce.
Failing to consider them properly could leave one spouse without the retirement security they deserve.
Why pensions matter in divorce
For many families, one spouse builds up a pension while the other spends years raising children or working part-time.
Ignoring pensions in a divorce settlement risks leaving one party without long-term financial security.
The courts recognise this which is why pensions must be considered alongside other assets such as property and savings.
How pensions can be divided
There are two main approaches:
A pension sharing order can also create a “clean break” giving each person financial independence moving forward.
Since the Welfare Reform and Pensions Act 1999, pension sharing has been available in divorce cases.
The Law Commission has even suggested making this the default option to ensure fairness but for now couples must apply to the court for a pension sharing order.
That is why getting specialist advice early in the process is essential. Without it you could lose out on what may be your most significant financial asset.
Planning ahead
If you are facing the prospect of divorce, here are a few things to consider:
Adding pensions to an already complex situation can provide additional stress, but it is important that you don’t miss out on this opportunity.
Historically, many women have found themselves with diminished pension pots due to their contributions to the family in other areas, so they should particularly pay attention to a potential claim during financial settlement.
Pensions are complicated but you do not have to tackle them alone. Our experienced family law solicitors guide clients through financial settlements with clarity and compassion. Speak to our team today for guidance.
