What are the options?
Offsetting Offsetting is where the value of the pension is "traded" for another asset. For example, you have joint ownership of your home worth £300,000 after repayment of the mortgage, and your spouse has a personal pension fund of £300,000. If offsetting is agreed, you might agree to keep the home and your spouse keeps their pension. Earmarking Earmarking is where an agreed percentage of the pension is identified as |
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Pension Sharing
Pension sharing means that the members pension rights are split when they get divorced. A percentage of the pension fund as ordered by the court, is secured for the ex spouse as part of the divorce settlement. Pension sharing provides for the immediate division of the pension into two separate pots, each individually owned, thereby removing the dependency and association applicable to the earmarking arrangement.
Simplification Proposals
The basic principles of pension sharing remain largely unaffected by the governments pension simplification proposals. However, the way in which pension sharing impacts upon an individual's tax- advantaged pension entitlement will change, and an individual's lifetime allowance will be affected in different ways depending on whether the pension sharing order was created before or after A-Day ( 6th April 2006).
For advice on the various options you have on divorce, regarding your pension fund, or your spouses pension fund, please email us and we will make contact with you, and provide you with advice, and work with you to achieve the best outcome.
