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What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

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The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


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Forces pension

  • revenge
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05 Aug 12 #347402 by revenge
Topic started by revenge
My husband receives armed forces pension, after tax around £800 a month. He is 46 I am 52. He served 22 years in the forces, he took a lump sum when he left.
He has said he will pay me 50% of the monthly payment for now until we sort the rest of the fiances out.
He pays tax on this monthly sum, so he suggests that as he pays tax the amount he is giving me, he will share the tax burden between us.
I don''t know if that is the right way to do it, as I see it it is his tax burden not mine.
He has a CETV of just under £300k, he wants to keep 5 years of this because he paid into it for that amount of time before we married.
We have been married 22 years. I don''t have a pension of my own.
What will the possible division on the pension be? Is likely to be 50/50 split?

  • kdad
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05 Aug 12 #347407 by kdad
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I agree with your ex - in my opinion, net income should be taken into account.

There are no hard and fast rules to the split in pension sharing. I would find out how a pension share works when pension is in payment before anything else. There was a link to the website in a post yesterday.

I hope this helps.

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05 Aug 12 #347411 by sexysadie
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In a marriage that long if you have no pension yourself it is likely to be a 50:50 split.

You need to do it via a pension sharing order so that you have your own pension from it and are not dependent on him. Otherwise it will stop when he dies. In the meantime while you sort it out it seems fair that he should pay you half of what he gets after tax.

Best wishes,
Sadie

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05 Aug 12 #347414 by kdad
Reply from kdad
I do not agree that a pension sharing order is the only way. Whilst it does protect against the death of your ex, I would first find out how much you would get under a pension sharing order - for example, the amount may be changed dependant upon your age/his age. There are other ways of protecting against the death of the ex.

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05 Aug 12 #347424 by hadenoughnow
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Pension sharing is an established option on divorce (enshrined in law) ... and for many people it is a godsend especially women (usually)who have been unable to build up their own pension pot because of childcare responsibilities etc.

The pensions are marital assets. They have effectively been built up using marital cash (through deductions from salary and/or as a benefit of employment). The costs of pension sharing are usually minimal compared with the potential benefit - especially in a case where one party has little or no pension but the other has a substantial fund. There are cases where sharing is not viable because of costs/negligible benefit but these would be where the pension pot is small.

There are 3 ways to deal with pensions on divorce - sharing, offsetting against other assets - usually equity - and earmarking. There is information about all of these in the wikivorce library.

The most usual options are sharing - assuming there are enough other assets to meet the housing needs of both parties or offsetting - especially where one party needs most (or even all) of the available assets in order to house themselves and children. The offset value is usually a percentage of the CETV but there is no hard and fast rule about what percentage. The entire pension, even that accrued before marriage, may be counted although this is often the subject of debate. When offsetting happens, it is often argued that the ex spouse who receives the largest share of the equity can, in future, downsize to release cash to fund retirement.

Spousal maintenance can be paid for life - and it is also possible for there to be life insurance as part of the order to ensure the income is protected. However, SM is not guaranteed as it is dependent on the other party''s income while they are in work. There is also an increasing move towards Clean Break settlements where possible and joint lives orders are (anecdotally) becoming less common.

It is possible to have a term SM order which pays the ex spouse an income until retirement at which point the pension share kicks in. The payments currently being made would be classed as SM paid from net income.

As far as forces pensions go, there are rules for calulating the percentage of an army pension to be awarded to an ex spouse. ie 50% of the CETV for the years of the marriage. The ex spouse has an army pension in their own right (with their own retirement age) but afaik if a lump sum has already been taken, may not be able to take another. Bear in mind that with an army pension, the amount paid increases as the ex service person gets older. I think there is another uprate at 55. Try googling MOD pensions on divorce.

If he is still working - and earning - does he have another pension?

Hadenoughnow

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05 Aug 12 #347425 by kdad
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I agree, but I still maintain that there are other ways. There are plans where the Trustees force the pension credit to be paid from a final salary scheme to a personal pension. Annuity rates are at an all-time low, and are restricted to when they can be taken. It is short-sighted to only pursue a pension share if someone loses out.

All I am saying is - do your homework, ask questions, get advice.

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05 Aug 12 #347445 by Fiona
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Pensions have to be seen in light of the overall finances. In England & Wales where assets originate from is less important with the passing of time so after a long marriage the whole pension is likely to be considered a matrimonial asset.

The starting point with a pension in payment is a Cash Equivalent Benefit valuation.

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