Understanding pensions on divorce

I have just read a single joint expert witness report prepared to answer the question “How should the pension funds be split between a couple, on divorce, to provide equality of income?”

The report presented an outcome where the wife would receive 56% of the cash equivalent value of one of her ex-husband’s pension schemes.

Subsequently the husband has asked that the share be amended because his pension scheme (a SIPP) has risen in value since the report was prepared.

He feels that his ex-wife should get a smaller percentage (54%) of the now larger cash equivalent.

The wife asked my opinion.

I explained that it could take a number of months before the share was implemented and it was perfectly possible that the cash equivalent value could be lower than the number used in the report.

So by accepting a reduced percentage it seems that she would be taking all the risk.

If the value continued to rise, whilst she would receive a higher monetary value, it would not produce the equality of income tested in the report (his income would be potentially higher)

If, on the other hand the value fell her 54% would represent a smaller monetary amount than otherwise would have been the case.

It seems only fair to me that both parties should share the risk of a value falling and indeed share in the upside of any growth achieved.

What was disappointing was that the lady in question advised me that her Solicitor had said to her “I don’t really understand pensions!”

It seems to me that she needs a Solicitor who will challenge things like this and take expert advice where needed.

For a copy of our booklet A Guide to Your Pension Sharing Order on Divorce visit the link below or call us on 01483 274566 to request a copy:

The Informed Choice Pensions & Divorce Guide 2013-14

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