Divorce and family law

If you're wondering what happens to pensions on divorce, you are in the right place. This is a guide to how pension assets are dealt with in financial remedy proceedings and the orders that the court can make.

To discuss a family law issue call 0113 320 5000

Often, pensions are one of the most significant assets of a marriage. However, due to their complexities and the deferred benefit they bring, they are often overlooked and not always factored into the terms of an overall financial settlement. It is, therefore, extremely important that early, expert advice is sought to ensure that they are considered when resolving the financial arrangements in the event of a divorce.

Put simply, a pension is a type of savings plan which produces an income in retirement. Pensions have specific rules and regulations around them, with specific tax rules, which can be complex.

There are two kinds of pension provision in the UK: the state pension and private pensions. The state pension is a payment made by the Government when an individual reaches state pension age. This is primarily based on national insurance contributions made by them throughout their working life.

A private pension is a savings plan that an individual or their employer sets up and contributes to throughout their working life. The main types of private pensions are defined contribution schemes and defined benefit schemes. The picture is further complicated by the fact that some schemes outside of the normal state pension are public sector schemes, such as those provided by the NHS, or local authorities.

It is important when considering the terms of an overall financial settlement to understand first and foremost the extent of both parties’ pension assets. Often, due to the passage of time, individuals are not always aware of the value of their total pension assets and therefore early disclosure of the parties’ pension assets is crucial.

Pensions are often one of the most significant assets of the marriage.

The Matrimonial Causes Act 1973 (MCA) is the leading legislation which governs how the court considers financial provision. It sets out the powers of the court to make financial orders on or after the conclusion of a marriage.  

Section 25 (2) of the MCA refers to the ‘financial resources’ which each of the parties to the marriage has. It is well accepted that a pension is a financial resource which the court will have regard to.

It’s important to understand both parties’ pensions properly. That means each person must share full details of their pensions, including a recent statement showing how much the pension is worth. This is provided by the pension provider and is essential in sorting out the finances fairly during a divorce.

Pursuant to the MCA, the Court has the ability to make a number of orders in relation to Pensions including Pension Sharing and Pension Attachment Orders. In addition, the Court can also ‘offset’ pension assets against other assets such as property as part of an overall settlement.

Pension Sharing Orders

A Pension Sharing Order is an order of the Court which divides one parties' pension, allowing the other party to receive a portion of their pension in their own right. It separates one pension arrangement and creates two separate funds (or allows extraction of an element of the original pension into a new fund). The share remains a pension, however.

A Pension Attachment Order

A Pension Attachment Order (formerly known as a ‘Earmarking Order’) is an order which enables one party to receive a percentage of benefits paid from the other’s pension, similar to a form of maintenance payment. The pension remains in the original owner’s name until they withdraw funds from the pension, at which point, part of the pension is redirected to the other party. Now that Pension Sharing Orders can be made this is very rare although there may be specific circumstances where it is appropriate. This is something which no one should be agreeing to without understanding the implications and obtaining bespoke advice, however.

Pension Offsetting

Pension offsetting is the method in which one party retains their full pension assets and the other party receives an equivalent share of the other available assets, for example, property assets. It is another means of achieving a ‘clean break’ by compensating one party with assets of equivalent value to their share of the other’s pension. However, caution must be exercised, and expert advice is mandatory to ensure that such an arrangement is fair to both parties as often the true value of pensions is not obvious without expert advice.

A Pension on Divorce Expert (PODE) is a professional who can provide additional expert input on pension assets during divorce and they often work with lawyers and the Court to help individuals and the Court understand the true value and implications of a pension arrangement.

This may be required for a number of reasons but often a PODE is involved where the pension arrangement is of significant value, particularly complex, or there are a number of pension assets to be considered.

Our team of family law experts are on hand to offer you the support and advice you need during this challenging time.

Call us on 0113 320 5000 or email family@winstonsolicitors.co.uk.

At Winston Solicitors, we specialise in helping clients across Leeds, Harrogate, and Yorkshire as well as nationally with divorce cases involving pensions. 

Our Leeds-based team is ready to help you navigate pensions in divorce with clarity, confidence and expertise.

A guide to navigating the complexities of a divorce when a farm, farming partnership or farming business is to be considered

The assets involved when divorce and farming meet are often complex. Complexities include:

• generational ownership,
• illiquidity,
• (asset rich, cash poor),
• joint ownership with wider family,
• home and business enmeshed,
• husband and wife sharing legal interests in the farming partnership or business,
• often no working experience outside of the farm and diversified businesses dependent on farm infrastructure.

These are just some of the reasons why finding a fair solution for couples who have interests in a farm or land require a solicitor. It’s key to speak to a legal expert with appropriate knowledge and expertise, and one who gives attention to detail.

To discuss a family law issue call 0113 320 5000

Emotions around the land and farming enterprise can be very strong and this too can make discussions and negotiations more complex. A farm is a home and a business, and both parties in a marriage will often feel that they have made contributions and sacrifices, regardless of who was brought up on the farm.  Farms are almost uniquely businesses where the whole family can be involved. Often without obviously direct financial reward. Helping with, for example, the books, animal passports, training for health and safety, running holiday lets, mucking in at lambing, helping haul grain from the combine at harvest and the list goes on.

• Making sure that you have clear understanding of the background. How assets were acquired and by whom, and the history involved, especially where the farm is generational.
• Clearly defining what is owned and by whom - this is not always straight forward.
• Getting fair valuations of assets, including houses, farmland, machinery, buildings and live and dead stock, by way of example.
• Consideration of the debts as well as the assets and how they will continue to be serviced. How they are secured and the terms of any security and whether it can be released if necessary.
• The tax implications of sale or transfer of different assets.
• Income needs of the parties and any dependent children and from which assets is the income primarily derived.
• Contributions both financial and otherwise to the farm.
• The interests of any third parties including whether any assets are held in a trust.
• The potential for reorganising business structures to buy out share interests and retire directors.
• Understanding any development potential of the land and buildings.

When it comes to divorce and farming, no two farming divorces are the same. Very often appropriate experts will be needed to advise and provide information about many of the points referred to in the list above and at Winston Solicitors we work with a number of trusted land agents and valuers, and often the farm accountant. We frequently use shadow experts. These will be our own choice of expert to assist us to consider the evidence of the court appointed Single Joint Experts or the family advisors and to assist with raising questions of them when appropriate.

We can then tailor every strategy to the individual needs of the specific farming case we are advising on.

Our team of family law experts are on hand to offer you the support and advice you need during this challenging time.

Call us on 0113 320 5000 or email family@winstonsolicitors.co.uk.

At Winston Solicitors, we specialise in helping clients across Leeds, Harrogate, Yorkshire and Northumberland as well as nationally with divorce cases involving farming and inherited assets.

Our team is ready to help you navigate your divorce with clarity, confidence and expertise.