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History: Home UK Divorce Forum
Topic:
Pension split during divorce (7 Posts)
Started By:
Date:
10 November, 2017 08:30PM
Pension split during divorce
gammyleg - 10 November, 2017 08:30PM
Hi,

My wife & I ( 55yrs & 54 yrs resp.) are planning to divorce after 7 years of separation. It is quite amicable and we have so far split everything 50/50. The only outstanding item is now our respective pensions.

I expect that my pensions ( 4no so far with various employers ) will have a higher value than hers as I have worked all my life whereas she took time off to look after the kids when they were young.

I have requested & received statements from all my pension providers and they include a 'Transfer Value' which, I assume when totalled up, my ex will be entitled to 50% of. Similarly I assume that I will be entitled to 50% of hers. Please advise if these assumptions are correct.

My simple solution to paying my ex her due, is that I wait until I turn 55 next year at which point I can access my pension(s) and transfer whatever sum she is entitled to. If this is legally do-able my ex is quite happy with this arrangement.

Is any of the above correct or am I living in a dream-world?

Thanks
Re: Pension split during divorce
jill_of_all_trades - 10 November, 2017 10:07PM
If you take pensions early you take a tax hit. It is better to transfer pension capital into another pension plan.
Re: Pension split during divorce
gammyleg - 10 November, 2017 10:34PM
Thanks for the reply.

Who would take the'tax hit' and how much would it be? I plan only to take out what was necessary to pay to my ex. The remainder would stay in my pension scheme.
Re: Pension split during divorce
davidterry - 11 November, 2017 09:14AM
It is probably not sensible to do it in the way you propose. Say, for instance, it would be appropriate to transfer £100K of your pension to your wife. If that was done by way of a pension share she would receive £100K worth of pension and what she did with it would be up to her. If on the other hand you withdrew £100K from your pension in order to give it to your wife you would be charged income tax at your marginal rate (which would be deducted at source). Therefore you might only receive, say, £60K. Unless you want to make a large donation to the tax man what you propose looks like a very bad idea.
Re: Pension split during divorce
gammyleg - 11 November, 2017 09:43AM
David,

Perfect advice, thanks for the information. Is it a particularly complicated &/or expensive process to arrange for a pension share?

Also, as I stated in the original post, I have 4no pensions. Each one has performed differently in respect of how well the funds have been invested and for how long they were being paid into. Can I assume that my ex can pick & choose which one(s) to take a share of?



Edited 1 time(s). Last edit at 11/11/2017 09:44AM by gammyleg.
Re: Pension split during divorce
davidterry - 11 November, 2017 11:18AM
>>Is it a particularly complicated &/or expensive process to arrange for a pension share?

No, not if you are both in agreement. In that case it is simply a matter of obtaining a court order by consent which provides for pension sharing. Provided you are both agreed the costs should be quite modest. I should say that the only way of formally dividing a pension requires a court order.

>>Can I assume that my ex can pick & choose which one(s) to take a share of?

No. There is usually a logic to how pensions are divided. Say you have four pensions with capital transfer values of £200K, £50K, £50K and £50K. It would usually make sense to make one pension share out of the £200K pension and thereby incur one set of pension sharing charges rather than share each of the four and thereby incur four sets of pension sharing charges.
Re: Pension split during divorce
gammyleg - 11 November, 2017 11:54AM
Again, thanks for the great advice.

I now have a much better idea of what is now required and could well be in touch soon to arrange for your services in moving this forward.

Regards
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