Divorcing couples should not disregard pensions in favour of family home

Couples going through a divorce should not disregard pensions in favour of trying to retain the value of the family home, as they may be missing out on a significant retirement income as a result.

Ipswich-based law firm Prettys senior associate, Matthew Clemence, has said that couples going through a divorce should recognise the importance of claiming a share of their partner’s pension as well as splitting the value of their property.

However, many people going through divorce proceedings do not seem to value pensions in the way they should because they are more focused on short-term financial goals.

“As part of divorce proceedings, pension funds can be shared,” said Clemence. “Even when made aware of this information, many people still often prefer the house as they believe it is the most lucrative option.”

He has also pointed out that having a smaller pension than a partner does not necessarily mean someone will end up being worse off in the event of a split.

“If there is a big disparity between the two parties’ pensions, the courts will often try and even this out when dividing pensions during divorce proceedings.

“Ultimately though, courts look for fairness for the future and will benefit whoever in the relationship is financially weaker, which in our experiences tends to be the parent undertaking the majority of care for the children.”

When it comes to dividing pensions, explained Clemence, courts do not have to take into consideration future earnings and need only divide the sum as it stands at the time.

The process starts with a look at the capital value of both parties’ pensions. If a couple are approaching, or are over, 50 the court can also be asked to consider the income value of the pensions and divide with reference to this rather than capital value.

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