The Family Law Company by Hartnell Chanot has been serving firefighters and their families for over 20 years helping them to resolve their marital disputes in a non-confrontational way. Rachel Buckley, Director and Head of the Divorce and Finance team explains how pensions and divorce work.
One of the main concerns for firefighters is what will happen to their pension on divorce. They have worked hard, in dangerous and stressful situations to build up this hugely valuable asset and understandably want to hold on it to it in the event of a relationship breakdown.
How will the finances be settled?
Settling the financial matters as a result of a marriage breakdown involves a 2 stage process. The first is information gathering – what assets do you and your spouse have and how much are they worth?
How do I get my pension valued?
You can obtain the value of your pension by asking the pension department for the “CETV” which stands for Cash Equivalent Transfer Value. This is the amount you would need to purchase a pension which gives the same benefits on the open market. This can be a figure running into several hundreds of thousands – sometimes its worth more than the matrimonial home. Frequently, this CETV will under value the benefits and therefore an actuary may have to be appointed to give a true value. It is very important that the actuary is asked the right questions as this can make a difference as to the contents of the report and the recommendations made. It is really important to get specialist legal advice here.
What factors are taken into account when dividing our assets?
The second stage is how should the assets be divided between you and your spouse. The courts will try to reach a conclusion as to what is fair using a number of factors known as “Section 25 factors”. This is because the factors are contained in Section 25 of the Matrimonial Causes Act 1973. These factors are as follows:
- Income and earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future including, in the case of earning capacity, any increase in that capacity which it would in the opinion of the Court be reasonable to expect the person to take steps to acquire.
- The financial needs, obligations and responsibilities, which each spouse has or is likely to have in the foreseeable future. Needs are an important aspect. The principle is that each party and the children should have enough to meet their needs assessed at a standard similar to that enjoyed during the marriage.
- The standard of living enjoyed by the family before the breakdown of the marriage.
- The ages of each spouse and the duration of the marriage.
- Any physical or mental disability of each spouse.
- The contributions which each spouse has made or is likely to make in the future to the welfare of the family including any contribution by looking after the home or caring for the family.
- The conduct of each spouse if that conduct is such that it would be in the opinion of the Court inequitable to disregard. This has to be very serious conduct, for example, serious financial misconduct, severe violence or sexual abuse. The fact that you or your spouse may have pursued adulterous relationships will not count as conduct and has no relevance to the issue of finances.
- The value to each spouse of any benefit which one spouse because of the divorce would lose. This usually applies to pension provision which includes Additional State Pension.
However, the first consideration, before looking at any of the above factors, will be the welfare of the children. It is not to be seen as the most important factor but it is the first factor any Court will look at.
What options do I have?
- Depending on what other pension provision your spouse has, you could agree to each keep your own pensions.
- Offsetting is another option – this is where your spouse could have a larger share of the other available assets in return for you keeping all or part of your pension.
- Pension sharing order – this is where an order is made that a percentage of your pension is taken and transferred to your spouse. Any contributions you make after the pension sharing order is implemented will go only to your share. Your spouse would not be able to receive income from your pension when you retire – usually they have to be aged 60 to take the benefits.
- If you are close to retirement you could see if your spouse would accept a share of the lump sum you will receive on retirement in return for not having a pension sharing order – this may be attractive if your spouse would rather have the capital sooner.
Will my spouse automatically get half of my pension?
Not necessarily. In circumstances where you have been in the service for longer than the marriage and thus have pre marriage contributions there is an argument to be had that these years should be disregarded. In addition, if your spouse has pension provision of their own this should be taken into account as well in reducing the claim that they may have on your pension.
Overall this is a very complex area of family law. You should ensure that you take specialist legal advice as the decisions that you take now will affect the rest of your life. Particularly, they are decisions that you may be taking which will affect your income on retirement which for many may feel like a long way away but in reality it is not. You don’t want to be looking back when you reach retirement regretting the decisions you made.
Rachel Buckley is a Director of The Family Law Company by Hartnell Chanot. Rachel has over 15 years’ experience in advising members of the emergency and armed services. The firm offers a 10% discount to those who are members of the service and offers the first appointment entirely free. Rachel can advise on:
- Fire service pensions on divorce
- Financial matters on separation
- Cohabitation Disputes
- Pre Nuptial Agreements and Separation Agreements
- Domestic Abuse
How to contact Rachel: