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How does my divorce affect my pension?
16 Apr 2020

A slump in the stock market, businesses stalled and people furloughed from work – the economic impact of the Covid-19 pandemic is wide reaching. It is affecting everyone in one form or another, including those going through a divorce.

Kate Rowley, a solicitor in our Family department, discusses what it might mean for your divorce proceedings.

Kate said: “At the moment no one really knows what the long term economic impact of the coronavirus crisis will be which means it is a very uncertain time for anyone and particularly those resolving financial issues on divorce. There might be particular problems for people who are self-employed and have business interests, which form part of the matrimonial pot and pensions have taken a hit as the stock market nosedived.

“This means it is more important than ever to get legal and financial advice when negotiating your financial future.”

I am in the process of divorcing my husband/wife. Can this continue?

Your divorce negotiations can, of course, continue assuming your legal representatives are still working. We are still open for business. Courts are open for face to face hearings, making sure that judges, legal professionals, staff and all those attending hearings can maintain effective social distancing.

I want to get a new valuation on my pension for my financial settlement.

Many businesses are working under challenging circumstances at the moment and it may take some time for you to get a new Cash Equivalent Value of your pension or to get an updated report from an actuary. However, in some situations we would advise you to put up with the delay wait. It is always a risk to settle without a proper understanding of the assets available to you.

The stock market slump happened after I received a valuation on my pension for financial settlement. 

We’re not entirely sure yet what the long-term impact will be for pension funds and it is too early to say what may happen to the value of your pension. At the moment we would advise clients to exercise caution in reaching agreements in respect of pension sharing.

Also different types of pensions – ie defined benefits schemes or defined contribution pensions - offer different benefits and may be impacted differently so extra care is needed where there is more than one pension to be shared.

But there may be a deficit between the quoted value of the pension and the underlying funds available to the scheme due to the fluctuations in the stock market. This was a problem during the 2008 financial crash. It might mean that in the event of an external transfer following a pension sharing order the pension scheme is only able to pay out a reduced transfer value. It’s very important that you take advice from an independent adviser.

We have agreed a financial settlement but now the value of benefits might have changed. What can I do?

It depends where you are in the process. If your financial settlement is yet to be formalised by a court order it may be possible to renegotiate. However, it would be important to seek financial and legal advice before you make consider any changes.

We are trying to sell the marital home as part of the divorce but it's taking a long time. 

The Government is urging people to ‘adapt and be flexible’ during this period when it comes to buying and selling homes and it may mean a delay to marketing or accepting an offer on your home and the subsequent sale.