When a divorcing couple come to sort out their finances the question of what to do with pensions is often overlooked, avoided or simply swept under the carpet because it is too complicated.  However, the fact remains that next to the matrimonial home, pensions can be the most valuable of the matrimonial assets.  There is no doubt that deciding how to deal with pensions is complicated but when the subject is approached correctly and with expert advice, huge financial losses can be avoided.

Aside from the state pension scheme, private pensions usually fall into two categories:

  • Some pensions have a value, which is directly linked to the amount of contributions paid during someone’s working life. These are called “Defined Contribution Pensions.”
  • Other pensions are valued according to the terms of the scheme, and the value does not have any relation to the contributions paid. These are called “Defined Benefit Schemes.”

In cases where pension values are high and in particular, where there are defined benefit schemes, it is essential to obtain specialist legal advice and also specialist financial advice from an actuary or a qualified financial advisor.

Paula’s husband worked for the Council all his life.  They were getting divorced and he told Paula that she could have the house, which was worth £350,000 if he kept his pension which was worth £420,000.  To Paula this seemed like a fair settlement.  However, Paula’s lawyer advised her to seek specialist advice on her husband’s pension.  It turned out that the true market value of the pension was £800,000.  Paula went to Court and in addition to the house she obtain a third of her husband’s pension. Paula was very relieved that she sought appropriate expert legal advice.

At Maxwell Hodge Solicitors, we can offer expert advice on how to divide assets to divorcing couples.

Michael Pratt is an accredited pensions’ specialist with Resolution.

We can offer a fixed fee consultation for £100 plus VAT and further advice and support at a competitive hourly rate.