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Friendly, no cost, no obligation consultation CALL US NOW! 01752 205205


Money Matters Financial Advert 130x95.indd 1


Divorce W


ithout doubt this is a traumatic period for all parties and unfortunately gives


rise to a number of significant issues. One of those is financial adjustment of the matrimonial assets and that includes any pensions. After the home, the pension is likely to be the biggest asset so how it is dealt with is of extreme importance to both parties. For example a pension in the name of one partner can be split/reallocated between both partners so that each can benefit in the future.


A quick look at some situations will highlight potential problems. For example, a wife may not have any pension at all simply because there may not have been sufficient time or income to start a plan. Also, even if there is a plan chances are that it will be of lower value than the other partner. There could be a complete imbalance between the values of the plans of each partner and it is likely that the husband will be able to rebuild benefits a lot quicker due to job retention/membership of scheme.


So there are two main issues to consider. Firstly—how do you value a pension? Secondly - how do you adjust or reallocate the pension between the two partners? The accepted way to value a pension is for the provider to calculate a transfer value. This is a sum of money which values the benefits acquired to date. The calculations are slightly different depending on the type of plan you have. How do you adjust/reallocate the pension? There are three ways to do this – Offsetting, earmarking and sharing. The choice will be down to the parties concerned and will vary from case to case.


offsetting. Here the value of all matrimonial assets including the pension(s) is calculated. Thereafter the assets are divided in line with the settlement terms. It may be that a pension fund/value has to be adjusted to reflect the settlement terms or it may just be allocated to one partner with the other receiving other assets. The exact terms of


Kingsley Close • East Way • Lee Mill • Ivybridge • Devon • PL21 9GD SWLaw Investment & Financial Planning Ltd


Registered in England. Company Number 03462625 Authorised and regulated by the Financial Conduct Authority. Firm No 222033


Do you need an income from your investments? Is your pension on track?


Worried about inheritance tax? Want to reduce your tax burden?


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Friendly, no cost, no obligation consultation CALL US NOW! 01752 205205


Kingsley Close • East Way • Lee Mill • Ivybridge • Devon • PL21 9G SWLaw Investment & Financial Planning Ltd


swlaw.co.uk by Robert Webb of SWLaw Solicitors


Registered in England. Company Number 03462625 Authorised and regulated by the Financial Conduct Authority. Firm No 222033


25/05/2017 16:50 Financial Advert 130x95.indd 1


settlements will vary from case to case but offsetting is fairly straightforward and easy to understand


earmarking. This allows for part or maybe all of the member’s pension benefits to be paid to the ex spouse when they finally become payable to the member. This will usually apply to works pensions/ final salary schemes but does give rise to a number of problems. Whilst this option should be examined it is not widely used.


Finally, pension sharing. In this option a pension is valued and a transfer value is calculated and then split according to the overall financial settlement. For example if the parties agree to split the matrimonial assets on a 50/50 basis the transfer value is divided in the same proportion and the relevant amount sent to a new pension plan for the ex spouse. In that way, the receiving partner has a plan in his /her own name and total control over the investment and timing of taking benefits. This is a clean break and leaves both partners in total control of their pensions which must be a constructive outcome.


As ever with pensions, nothing is a straight line. However, with a little careful planning and foresight it is possible to obtain an outcome which is beneficial to both parties and particularly for those whose knowledge and experience of pensions is not great!!


Legal and financial situations rarely occur in isolation – SWLaw Investment & Financial Planning Ltd and SWLaw Solicitors Ltd are two separate companies which work together to provide integrated advice to clients. The practices develop a full understanding of your current circumstances and likely future needs in order to provide solutions which will work for you in the long term. Robert Webb, Consultant, SWLaw Investment & Financial Planning • 01752 205205


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