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How does Retirement affect Divorce?

Jan 7, 2016

When you make the difficult decision to get divorced you may not immediately think about the implications of your divorce on your retirement or indeed the impact on your pension if you are already retired but your pension is possibly one of the largest assets you have next to your family home.

It is therefore really important to consider your options carefully and to get advice from a specialist family law solicitor to decide which one works best for you in the circumstances.

If you are getting a divorce and you are retired and you want to stay in the family home, this could create a problem for you if you need to try to re-mortgage your property in order to stay there. There are some other options available to you other than re-mortgaging and these are tied into how the pensions are split in the divorce.

There are three usual ways in which a pension is split in a divorce. These are pension sharing, pension offsetting and pension earmarking.

Pension Sharing – with this option, the Court will decide how the pension should be split between you and will issue a Pension Sharing Order, also known as a PSO. Once this amount has been decided upon by the court this is called a Pension Credit and you can transfer this amount to an existing pension scheme or in fact start a new one. There may be an administration cost attached to the Pension Sharing Order.

Pension Offsetting – this option allows you both to keep your own pension arrangements, but the value of your pension has to be offset against your other assets. If you or your spouse has a large pension pot, the only other asset of similar value may be your property. This could allow you to stay in the family home even if you are unable to obtain a mortgage on it.

Pension Earmarking – this allows payments to be made to your ex-spouse from your pension but there are a number of drawbacks to this option. You will not get any money until your ex-spouse retires and is drawing a pension. In addition, if they die you will get nothing. Pension earmarking also means that you cannot achieve a clean break settlement following your divorce.

You should take advice from a specialist divorce solicitor who can give you the right advice tailored to your particular circumstances and ensure that you achieve the best possible settlement.

If you would like help and advice about how your divorce settlement will be affected by your retirement, please call and speak to one of our specialist divorce solicitors today. You can call us on 01264 353 411 or you can contact us online by emailing us on divorce@bsandi.co.uk  or completing our free online enquiry.


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