How Much Of My Ex husband’s Pension Am I Entitled To?
How much of much ex husband’s pension am I entitled to? This question is commonly asked when it comes to getting a divorce.
It is often found in divorces today that pensions are to be taken into account and divided between the parties involved as part for the financial settlement. As well as the value of the former matrimonial home the pension provision of one or both spouses may be the largest capital asset of the marriage.
How much of your husband’s pension you’ll receive after a divorce depends very much on the circumstances and facts of your particular case.
When considering any financial settlement, full and frank financial disclosure should be exchanged between the parties. This is usually achieved by completing and exchanging a Financial Statement known as Form E, which sets out all the assets of the marriage including properties, cars, savings and pensions.
Pension schemes are usually valued at their ‘Cash Equivalent Transfer Value’ (CETV), the amount of money all of the Pension benefits are deemed to be worth if the scheme member elected to move it to another Pension scheme. In some cases, a more in depth valuation may be needed. This is certainly true of pensions associated with the armed forces, police and final salary pension schemes, which need to be considered differently.
The only way to divide your husband’s pension during the divorce will be via a court order.
There are three main options for splitting a pension in divorce:
- Pension Offsetting, where your husband’s pension isn’t actually divided, but you receive an asset of corresponding worth during the divorce process, e.g. a property with an equivalent value to his pension. This may initially seem attractive, for example “you keep the house I’ll keep my Pension” However, there are potential disadvantages for all parties, for example a house can usually be sold with 100% of the proceeds payable as a lump sum tax free, whereas the maximum tax free amount for a pension is 25%. Conversely, a pension fund is normally protected against creditors or long term care costs whereas a house is not. There are all sorts of potential implications of offsetting, some of which may not become apparent until it is too late to do anything about it.
- Pension Earmarking, where the court orders that you receive a set percentage of your husband’s pension benefits, so if he had a pension of £20,000 a year and the court said you should have 50%, you’d each receive a pension of £10,000 per year. The problem with this method is that having divorced; you then have to wait for them to retire before you get any money. If they choose to retire late, you have to wait longer and if they die before retirement you can be left with nothing.
- A Pension Sharing Order, which offers the option of a clean break and sees you awarded a set percentage of the value of your husband’s pension savings, which are then broken away from his plan to set up your own pension in your name, either with his pension plan provider or totally separate from it. This means you do not have to wait around for your husband to retire and allows each partner more direct control over their finances. Once the pension has been shared, the two schemes work independently. It is then up to each party to continue to manage their respective pension fund to make sure that it produces the best results for them on retirement.
“How much of my husband’s pension am I entitled to?” Well, there’s no simple answer. The amount of the percentage will depend on a number of factors and will also vary depending on the level of pension the receiving party already has. It is not necessarily the case that an ex will be entitled to 50% of any pension.
If you would like to discuss this matter further or anything related to your divorce please call Paul Prentice on 01483 237 989 or email email@example.com for a free initial telephone consultation.