Divorce is often a difficult time for both parties involved in the process.
It can be made more difficult by the fact that they may have to deal with Pensions Sharing as part of the financial settlement to which they agree.
Many people avoid the subject of pensions at the best of times, jargon strewn as it tends to be.
Working out the best way to share the pension pot can be a real challenge.
Solicitors and both parties to the divorce will typically engage with an “expert” to help them work out the best solution. Sometimes this will be in the form of a single joint expert witness report written by the pensions practitioner for the Court and usually with the goal in mind of working out the split to generate equivalent retirement income.
After the agreement has been reached one party to the divorce will receive a Pension Sharing Annex which will set out their share of the pension fund of the other expressed as a percentage.
The recipient may well then have some choices about what he or she does with the share and the usual thing is that they will transfer to a private arrangement of their own. But sometimes they may be offered “shadow membership” of the other parties defined benefits scheme (final salary scheme).
This is a little ironic in that in this day and age few of us are going to be able to join final salary schemes and yet the action of divorce sometimes creates this opportunity!
If you are faced with the prospect of having to deal with Pension Sharing do make sure that you seek independent and expert advice.
Photo credit: Flickr/heydrienne
