Ignoring or undervaluing pensions could leave you hard up says Ellie Foster, a partner in LCF Law’s family law team.
Many divorcing couples overlook the value of their pensions. They can seem too complicated and intimidating at an already stressful time or appear irrelevant in the short term. As a result, studies suggest that fewer than one in nine divorce settlements include a pension sharing order.
When dividing your money and assets, it’s important to consider how to share all your assets (including pensions) between you fairly and how your needs will be met after divorce – not just in the short term, but in the long term too.
A pension can be worth much more than it appears at first, and in failing to recognise this, many people are coming out of divorce having unwittingly drawn the short straw. Research shows that this is leaving women particularly in unnecessarily precarious financial positions later in life.
Often it is thought that if one party has a larger pension, it should remain with them since they have earnt it. However, marriage is a partnership with each person playing their own role and it might not have been possible to generate this had the other party not taken time out of work to raise the children, for example.
To ensure a fair outcome for both parties, it is important to identify what pensions each of you has and how much they are worth before you reach an agreement. It can be extremely difficult to know the real value of a pension or what income it will produce in future without the help of a specialist, especially when there are different types of pension to consider.
For example, the defined contribution pensions typically offered by private sector employers cannot be compared like for like with the defined benefit pensions provided by public sector organisations, which tend to be more generous.
There can be added complications if a pension is based overseas or you’re divorcing abroad and the pension is based in England so you’ll need a specialist family solicitor to deal with this for you.
While it can feel overwhelming thinking about your future finances, it’s important to go into divorce with both eyes open. At LCF Law we can guide you through the process with compassion and have the expertise and contacts to help you make informed decisions.
Working with reputable pensions on divorce experts and your other professional advisors, we will ensure that your pensions are explored and divided to provide each party with a fair value on divorce.
Family law partner Ellie Foster specialises in helping couples reach a financial settlement on divorce. Her cases routinely involve substantial assets and complex issues relating to businesses, trusts, pensions and international aspects.
She is trained in collaborative law through Resolution and always strives to achieve fair and amicable outcomes, without involving the courts wherever possible.
Ellie can be contacted on 01423 851 112 or efoster@lcf.co.uk or via www.lcf.co.uk
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