The approaches that the court uses
There are at the current time three approaches that can be used by the court for awarding part of your pension to a previous spouse/civil partner on divorce or dissolution. These approaches are:
- Pension Offsetting
- Pension Earmarking
- Pension Sharing
In the United Kingom there are 2 different legal processes dependent on where in the country the divorce or dissolution takes place:
- The courts of England, Wales and Northern Ireland
- The courts of Scotland
As a result, there might be six different combinations for handling your divorce or dissolution. The 1st decision for you, your solicitor and the other parties involved in the divorce or dissolution proceedings is to agree which one of these combinations applies in your case.
It will then be important to come to an agreement by negotiation, mediation, or decided for by the court what quantity of your pensions are to be shared between the parties concerned the divorce or dissolution.
Pension Offsetting
With offsetting, the court could make a decision to just offset the value of your pension against other financial assets. The idea behind an offset is that the civil partner or spouse with the bigger pension benefits will accept a smaller chunk of the other family assets to balance out the value of their pension.
Pension Earmarking
This was introduced for divorce proceedings from 1st July 1996 in England, Wales and Northern Ireland. It means that a portion of your pension (including lump sums on retirement and death) is reserved or earmarked for your former spouse/civil partner. Earmarking was introduced in Scotland from 19th August 1996 but for lump sums, not pensions.
Pension Sharing
Since December 2000 divorcing couples have been able to achieve a financial 'clean break ' of the pension rights they have built up. This split is named 'pension sharing'. It allows an instant splitting of your pension benefit by transferring part of your pension to the pension plan of your former spouse/civil partner.
There are at the current time three approaches that can be used by the court for awarding part of your pension to a previous spouse/civil partner on divorce or dissolution. These approaches are:
- Pension Offsetting
- Pension Earmarking
- Pension Sharing
In the United Kingom there are 2 different legal processes dependent on where in the country the divorce or dissolution takes place:
- The courts of England, Wales and Northern Ireland
- The courts of Scotland
As a result, there might be six different combinations for handling your divorce or dissolution. The 1st decision for you, your solicitor and the other parties involved in the divorce or dissolution proceedings is to agree which one of these combinations applies in your case.
It will then be important to come to an agreement by negotiation, mediation, or decided for by the court what quantity of your pensions are to be shared between the parties concerned the divorce or dissolution.
Pension Offsetting
With offsetting, the court could make a decision to just offset the value of your pension against other financial assets. The idea behind an offset is that the civil partner or spouse with the bigger pension benefits will accept a smaller chunk of the other family assets to balance out the value of their pension.
Pension Earmarking
This was introduced for divorce proceedings from 1st July 1996 in England, Wales and Northern Ireland. It means that a portion of your pension (including lump sums on retirement and death) is reserved or earmarked for your former spouse/civil partner. Earmarking was introduced in Scotland from 19th August 1996 but for lump sums, not pensions.
Pension Sharing
Since December 2000 divorcing couples have been able to achieve a financial 'clean break ' of the pension rights they have built up. This split is named 'pension sharing'. It allows an instant splitting of your pension benefit by transferring part of your pension to the pension plan of your former spouse/civil partner.
About the Author:
Information thanks to Adviser Hub. If you would like to know lots more about the subject of ' divorce and pension' or need assistance with your pension valuation it is best to request advice from a qualified pensions adviser.
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