retirement

If you are divorcing or have already got divorced then you may or may not be aware that pension benefits either built up by you or your ex-spouse can form part of the divorce settlement. 

Up until December 2000, there were two ways in which pension benefits were used in divorce negotiations that is in a "clean break" arrangement or "set off" or by an "earmarking order".

With effect 1 December 2000, The Welfare Reform and Pensions Act 1999 made provision for a third option, pensions sharing on divorce.

Clean Break / Set Off - is where, as part of the divorce negotiation, the value of the pension fund accrued is set off against other assets within the marriage e.g. the husband keeps the contents of the former matrimonial home and the wife retains her pension benefits.  Thus providing a clean break.

Earmarking - this is where agreement had not been reached by the two parties and the case has gone to court for settlement.  It is then within the courts powers to issue an order for part of an accrued pension benefit to be earmarked for the other party.

Pensions Sharing - came into affect on for divorce proceedings on or after 1 December 2000.  It gives the power for courts to issue an order to share / split part or all of the accrued pension benefits.  There are effectively two pensions, one in each party's name.

Having part of your pension fund taken away or indeed acquiring new pension rights can present problems in themselves for individuals. 

If you have lost benefits, how can you make up the shortfall?  What are the rules?

If you gain a share in a pension fund, how and where will you invest it?  Can you leave it where it is?

For more on this subject and your rights please visit our sites Divorce and Pensions.com and Divorce Adviser.com.