Last updated on August 18th, 2015 at 02:49 pm

Calculating the true value of a pension can be complex; much may depend on the type of pension scheme it is part of.  Pensions with a high street provider, company pensions and pensions with organisations like the NHS or Army may all have a paper value (usually called a transfer value) that look the same, but in fact the true actuarial value of those pensions,  and therefore the income each will provide, will be vastly different.

Valuing a pension is one thing; working out how to distribute it is another.  There are generally three ways in which a pension can be shared.  These are:

Offsetting is where one party keeps their pension and the other party receives a greater share of something else such as the family home. This can be a difficult calculation.  For example; if someone has a pension with a value of £100,000 and the other a property with a value of £100,000, it would be unusual to treat them as the same value for offsetting purposes.  This is because one can be ‘used’ immediately, whereas the other cannot be accessed until pensionable age is reached, and then only part can be taken as a lump sum the rest must be taken as income.

A pension attachment is an arrangement where, when the pension finally does pay out, part of it is ‘earmarked’ for the other party.  This means both parties have to wait until the one with the pension retires, and there is a risk there may be little or nothing to take if he or she dies before the pension is taken.

Pension sharing is where part of one party’s pension is actually taken out of their pension fund and transferred into a pension in the other party’s name.  This cuts down on the risk within a pension attachment order because, as the pension is in the spouse’s own name, they can draw it when they retire without having to wait for the other party to retire, and it does not matter what happens to the other party.  However, care must be taken to make sure the pension is valued properly and the split is a fair one.

So, if you want to avoid living in a shoe, and are looking for the most effective divorce settlement for your own situation, get expert family legal advice now from one of the largest, award winning family law teams in the region.

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