Let’s look at 2 hypothetical cases.
Mr and Mrs Smith decided not to invest in pensions. They bought Buy to Let properties as investments for their retirement, and at the date of their separation, these were worth a net equity of £750,000.
Mr and Mrs Jones invested their money in a pension, all of which was in Mr. Jones’s name. At the date of separation, the capital value was £750,000.
Both Mr. Smith and Mr. Jones wanted to retire early at 58.
Mr. Smith agreed that if he took some share in the properties now, his wife would be entitled to the same share as him.
But Mr. Jones insisted that he could choose to retire early and take the pension income and the tax-free 25% lump sum without any immediate resulting entitlement for his wife.
Both parties in both marriages worked full-time and had approximately equal incomes so spousal maintenance was not an issue.
But was it fair that Mister Jones should take income and capital, reducing the pension pot, just because he decided to retire early?
Mr. and Mrs. Jones were unable to agree a settlement and the case went to trial, resulting in Mr. Jones taking two years of pension income and the lump sum before the court case. His solicitor insisted he was entitled to retire when he wished, and an equalising pension sharing order should only relate to the remaining capital value at the date of the trial.
In a case like this which I conducted on behalf of the wife, the experienced District Judge was scathing about the husband’s attitude. He found that there was no difference in the way in which property or pension entitlement accrued, both were equal after a long marriage. And although of course, the husband could retire when he wished, the wife did not effectively have to fund him by losing half of his drawdown.
My client was understandably relieved and now looks forward to a comfortable retirement when she intends to stop working at her state retirement age.
Pensions in divorce are complex and frequently the largest assets to be divided. They must be dealt with fairly, and the recommendation of the Pensions Advisory Board is that where there is a fund of over £100,000 in question, then a formal report from a pensions expert should be obtained. A solicitor can then help you ensure a fair division between husband and wife, which is usually agreed by consent once a report has been obtained.
Penny Raby & co deals with such cases regularly and we will be happy to discuss your divorce problems in an initial telephone call free of charge. Phone 01386 555114 and make a telephone appointment to speak to Mike Gordon.