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PENSION SPLITTING IGNORNACE AMONGST BUSINESS OWNERSMANY BUSINESS owners in the UK are unaware of the true financial implications of getting divorced – particularly with regards to their pensions. According to Manchester divorce law specialists, George Davies Solicitors, many successful business people are unaware of the laws surrounding pension splitting. “The emotional and financial impact that a divorce has is widely known, but the Court’s relatively new powers of splitting a pension fund upon divorce are simply not appreciated. It is often assumed that a percentage of the fund can only be divided upon retirement, or even more worrying, that only property and other immediately available assets are considered and leaving the pension completely in tact,” warns Martin Karran, head of Family Law at George Davies Solicitors. Pension splitting involves dividing the actual pension into two separate and smaller pensions at the point when the divorce is finalised. This process has recently supplemented ‘earmarking’, whereby a certain percentage of the fund was given to the other partner, but only on retirement. Earmarking was rarely used and was often problematic. “The law has changed considerably in the last few years and the Courts have far greater powers than they once did. High net-worth individuals, such as business owners, build up large retirement funds in their career so the financial implications of pension splitting can be disproportionately significant. Remember however that there are still alternatives available such as offsetting pension investments by agreeing to transfer a larger amount of the other assets to the other partner by way of compensating for the retention of the pension. “There are a lot of issues to consider and in my experience, individuals who enter divorce proceedings with his or her eyes wide open, tend to come out the other end with a settlement far more suitable for them. When it comes to the issues surrounding pensions, it’s no different,” added Karran. |
