New guidance has been published by the Pension Advisory Group (PAG) on the treatment of pensions in divorce. The advice is designed to assist family lawyers, judges and pensions experts together to make the division of assets fairer and more transparent for all parties involved.
The multidisciplinary Pensions Advisory Group has produced clear, practical advice which will go a long way to addressing how pensions should be treated in divorce, which can give divorcing couples greater clarity when it comes to planning for the future after divorce. Hilary Woodward from Cardiff University who was a lead researcher on the project said:
“The aim of this guide is to help judges and practitioners navigate their way with more confidence through the tricky field of pensions on divorce, and ultimately improve the fairness of outcomes for those going through a divorce,”
The guide removes much of the jargon that is associated with pensions, which can improve communication between professionals involved in pension sharing in divorce across England & Wales.
The guide was produced as a result of the need to address significant variation in the division of assets in divorce as a result of gaps in understanding on the part of many professionals as to how they should deal with the valuation of pensions, pension sharing or pension offsetting. For more information on pensions in divorce, see our guidance ‘Dealing With Pensions In Divorce’,
Pensions are often overlooked by divorcing couples when it comes to the separation of assets, but your pension may be the most valuable asset you own, or second only to any property. However, pensions are a complex area of the law, and this complexity makes them particularly risky to deal with. There has been an increase in complaints and claims made against legal and other professionals in relation to how pensions have been handled in divorce cases, and as a result, the guidance is essential for legal professionals and clients alike.
The key factors discussed in the guidance relates to how information is gathered during the divorce process pursuant to dividing pensions in a fairly. This includes gathering information on state pensions, death benefits, guarantees and any other factors which may potentially complicate the division of pensions in divorce.
The guidance also includes information on how professionals should approach specific types of cases, including:
The guidance also discusses the situation where there are significant age differences between the parties to a divorce, or where there are income gap factors to be taken into consideration. The guidance gives a piece of clear and comprehensive advice when it comes to ‘complicating factors’ such as those described above, as well as further guidance as to when expert advice and valuations will be required in addition to legal advice from a divorce solicitor.
Divorce is always difficult, and discussing financial arrangements, particularly when emotions are running high can be challenging. However, you and your spouse will need to go through the process of finding an agreement that will provide a fair outcome for both of you.
Your pension or the pension of your spouse may be one of your most considerable marital assets, and as such, should be valued appropriately and considered as part of the divorce process. While the new guidance is exceptionally valuable in providing an outline for how your pension should be treated in divorce, the law in England and Wales does not end your financial ties to your spouse automatically. It is essential to take action to separate your pensions fairly to avoid one party claiming on the other’s pension years, or even decades down the line. I can help, get in touch today.
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