When you get divorced you can make a claim on your spouse's pension. The pension is one of the major assets considered by the court when deciding how to divide things up fairly.
|Consider a typical divorce scenario with a low income mum and higher earning dad with 2 kids. The mum is primary carer of the children, and wants to keep most of their matrimonial home. This is balanced by the dad keeping their other significant asset, which is his pensions. This is known as pension offsetting. In order to make a fair division it is important to know the value of the house and the value of the pensions.|
The Cash Equivalent Transfer Value (CETV) from the pension provider is usually sufficient for Money Purchase (defined contribution) pensions. However Final Salary Schemes (defined benefits pensions) can be undervalued by a CETV. These are the usual schemes for public sector workers, uniformed services and better private sector schemes. If you want a higher percentage of the house then it may be worth getting the appropriate, usually higher, valuation from an actuary.
Alternatively the dad might become the carer and need the home, or responsibilities may be shared. In these cases it may be necessary to transfer some or all of the pensions to the other party to even things out. Due to the complexities of Final Salary Pensions this can only be done fairly by an actuary working out what percentage of the pension should be shared. They can also tell you if there are any hidden costs in sharing and identify any extra risks.