What Are The Options For Dealing With Pensions In A Divorce?

• Published date: 24 June 2022
• Subject Matter: Employment and HR, Family and Matrimonial, Retirement, Superannuation & Pensions, Family Law, Divorce
• Law Firm: Harrison Drury Solicitors
• Author: Ms Hannah Pinder

In many divorce cases, the two largest assets are the family home and the parties' pensions. Pension funds are a shareable asset which can be divided between you and your spouse in the event of divorce. Hannah Pike, a solicitor in Harrison Drury's divorce and family law team, looks at the options for dealing with pensions.

Pension sharing in a divorce settlement can sometimes be a difficult issue to resolve, therefore it is recommended that you seek legal advice on your entitlement to your spouse's pension.

There are two main types of pension schemes: defined benefit and defined contribution. A defined benefit pension pays you income in retirement based on your salary and your length of service, whereas a defined contribution pension is a fund that you contribute into throughout your working life, often with your employer matching your contributions and those funds are invested on your behalf.

How is the value of a pension calculated?

The starting point is to request the Cash Equivalent Transfer Value (CETV) for all pensions directly from the pension provider. This figure represents the capital value of the pension on the date the CETV was issued. All pension providers will calculate transfer values differently and there is no 'one size fits all' approach. CETVs of defined benefit pensions, can be undervalued in terms of the benefits they provide upon retirement, compared to defined...