Divorce Guide

Divorce Guide


Pension Divorce Settlement


Whenever a couple registers their legal case for a divorce they barely remember to consider spouseís pension as a part of their assets. Pension is indeed a very essential matter which they do not take into consideration. In a pension divorce settlement there are certain calculations made which gives an idea about the pension and the other assets to be divided. In divorce cases, conflicts related to pensions can get complex.

Pension offsetting

Pension benefits are off setted against other assets of the couple by taking into account their total assets, for e.g. their matrimonial home. The party that holds the pension rights keeps it for him/herself and the other party gets the benefit of other assets, such as the right to live in the matrimonial home. It is difficult to get a fair share of a coupleís total assets by offsetting a pension pot against other assets. Also pension values tend to fluctuate more than property values.

Pension Earmarking

Pension earmarking came into existence in the 1995 Pensions Act, for the divorce petitions on or after 1st July 1996. As per the courtís instruction, the pension scheme pays a specified amount of the memberís pension to the ex-spouse. Either party can apply to the court for the amount specified at the time of the divorce with all periodical payment orders. The payment is made to the spouse with the pension pot when he/she retires or dies.

Pension Sharing

The court was given powers to split the pension rights between husband and wife at the time of divorce by The Welfare Reform and Pensions Act 1999. Its basic concept was to separate the ex-spouseís benefit entitlement from the memberís pension scheme. A pension sharing order was issued that created a Pension Credit Member (the ex-spouse) and a Pension Debit Member (the member). Memberís Cash Equivalent Transfer Value determines the pension credit. The credit is a percentage of the CETV, and not a fixed sum of money. Before the pension sharing order takes effect, the CETV is calculated, so that it can be higher or lower than the value disclosed at the start of the divorce proceedings.

Tips regarding pension divorce settlement

  • In a pension divorce settlement, Some states in the United States follow the concept of double counting. According to this method, while calculating child support, the money received as a pension is taken into account.
  • Depending on the state, there are two possibilities, considering that a divorced person earns pension after the divorce. The ex-spouse may or may not be entitled to the pension benefits after the divorce.
  • Assume that a wife had taken back her rights as a beneficiary in the retirement accounts of her ex husband. However, after his death it was known that two retirement accounts of the ex husband had named her as a beneficiary.

As the couple cannot reach an agreement on their own, it is necessary for the court to intervene.. As per the law, the wife/husband is not entitled to their respective pensions if they are splitting up. So a Pension divorce settlement is an important settlement as it is related to the pension money of either of the couple.


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