When you divorce, it is often the case that the largest assets you and your spouse own after your home are your pension funds. This is particularly common after a long marriage as there will have been more time for money to have accumulated ‘in the pot’.
In the course of settling financial matters, the court has the power to make pension sharing orders or pension attachment orders.
It’s always important when looking at the division of pensions to consider your pension as an income-creating vehicle as opposed to a capital asset. Large pension funds can usually help spouses reach a clean break.
For information on the different options available to you, read our Guide to Pensions Upon Divorce.
Unfortunately, the recent reforms to pensions can be said to have had a negative impact on older couples breaking up. Over 55s now have the freedom to take defined contribution pension savings as a lump sum rather than as income in retirement, thus creating an opportunity for those contemplating divorce to remove funds from the matrimonial pot. In some cases, where pension attachment orders are concerned, individuals have got around previous court orders.
When the UK Government introduced its amendments to pension legislation, it did not take into account these consequences. The Government is now trying to prevent abuse by placing a new duty on pension schemes that will notify beneficiaries of pension attaching orders if their ex is trying to transfer cash out of their pension fund.
It is vitally important that when contemplating divorce you seek advice from solicitors who are aware of such pitfalls and know the appropriate pension experts to prevent this from happening.
If you are going through a divorce the family and divorce solicitors at Slater and Gordon can help you through this difficult time. We can assist in finalising the division of assets including your pension.
Call us on freephone 0800 916 9055 or contact us online and we’ll be happy to help.
Liz Cowell is a senior family law solicitor at Slater and Gordon Lawyers in Manchester.