Pension offsetting divorce

Hello! I'm trying to negotiate a settlement for my divorce after almost 4 very painful years. I had a specialist pension report which gave an offset figure of 17k in my favour. The op is suggesting this is deducted from the equity of our house sale before we split the remaining proceeds. Surely that would be paying half myself?! My solicitor is awful so of no help. Does anyone know if this is correct? It seems ludicrous to me. Thanks 

Comments

  • Oh and threatening court if I don't accept
  • SusieT
    SusieT Posts: 1,267 Forumite
    First Post Name Dropper First Anniversary
    edited 21 December 2022 at 10:40PM
    If you agree the offset it is not a good way (for you) to do it, although I am not surprised your ex thinks it is good. Pretending for ease of explaining it is18k offset, and there is 100k equity in the property
    100000-18000=82000/2=41000 each
    100000/2=50000 each then deducting it from from your ex equity 50000-18000=32000  for them and 68k for you

    Credit card debt - NIL
    Home improvement secured loans 30,130/41,000 and 23,156/28,000 End 2027 and 2029
    Mortgage 64,513/100,000 End Nov 2035
    2022 all rolling into new mortgage + extra to finish house. 125,000 End 2036
  • Hello! I'm trying to negotiate a settlement for my divorce after almost 4 very painful years. I had a specialist pension report which gave an offset figure of 17k in my favour. The op is suggesting this is deducted from the equity of our house sale before we split the remaining proceeds. Surely that would be paying half myself?! My solicitor is awful so of no help. Does anyone know if this is correct? It seems ludicrous to me. Thanks 
    I don't have experience of pension offsetting but I presume a 17k offset figure in your favour means that once the assets are split you should get 17k more than the other party? If so then, do the sums for yourself but it doesn't really matter which asset is split and apportioned provided at the end of it you get 17k more than the other party. 

    Let's say there is 100k pension pot and 100k equity in the house for ease of calculation:

    You should get 50k from the house and 58.5/41.5 split on the pension so the total you get is 108.5k

    If you do the offset on the house then you get 50 from the pension and now you need to get 58.5 from the house. So you should just split the proceeds of the sale with the 17k offset in your favour. 

    Which is exactly the same as apportioning 17k off the top and then splitting the remaining 83 fifty-fifty with your ex. 

    It boils down to that initial assumption of what the offset figure actually means (and that's something you need to double-check) but if I understand it properly then it doesn't mean you get 'your half' plus 17k it means that you get an extra 8.5k and your ex gets 8.5k less creating a 17k gap between the two totals. 


  • tacpot12
    tacpot12 Posts: 7,924 Forumite
    First Anniversary Name Dropper First Post
    The firm that did the pensions offsetting report should be able to confirm whether the £17K amount is difference between each of your pension provisions, and hence only half this amount needs to be deducted from the house to even out what you are receiving OR the difference is £34K and hence the 17K amount is the amount that needs to be transferred between you.  

    This webpage confirms that it is normal to adjust the amount of the offset to reflect the tax and utility differences between capital in the home and capital in the form of pension savings: Pensions in Divorce - Offsetting, What Is It and What Are the Risks in It? - Law Firm in the Midlands and East Anglia - Roythornes Solicitors

    I think you should check with the firm what level of discount they applied, if any. 

    To come to your original question, if they owe you £17K from their pension, but want to pay it to you in the form of equity in the house, you will receive MORE of the equity in the house. You just need to make sure that this is reflected in the calculation. Clearly receiving £17K LESS from the house if they are supposed to be making up the difference in pensions is wrong. 
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • tacpot12 said:
    The firm that did the pensions offsetting report should be able to confirm whether the £17K amount is difference between each of your pension provisions, and hence only half this amount needs to be deducted from the house to even out what you are receiving OR the difference is £34K and hence the 17K amount is the amount that needs to be transferred between you.  
    just to get the arithmetic right if the offset is 17k to create a difference of 17k then the full amount of 17k has to be deducted from the house and apportioned to the OP before any split - because as they rightly say half of that amount was effectively theirs anyway. If the required effect is to transfer an extra 17k to the OP then you would have to apportion 34k off the top of the equity. 

    I haven't taken tax etc into account to keep the sums simple but the principle is as above. 

    The OP really needs to confirm what the offset number means - in theory there's no reason why the ex should object to anything once that is clarified. It's not really a matter of negotiation at this stage, just a matter of fact as to what the correct numbers are. Unless they are disagreeing with the offset figure but if they are then that's a bit of a forlorn hope to argue in court.
  • Exodi
    Exodi Posts: 2,848 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    edited 22 December 2022 at 1:17PM
    Know what you don't
  • TBagpuss
    TBagpuss Posts: 11,199 Forumite
    First Post First Anniversary Name Dropper
    Hello! I'm trying to negotiate a settlement for my divorce after almost 4 very painful years. I had a specialist pension report which gave an offset figure of 17k in my favour. The op is suggesting this is deducted from the equity of our house sale before we split the remaining proceeds. Surely that would be paying half myself?! My solicitor is awful so of no help. Does anyone know if this is correct? It seems ludicrous to me. Thanks 
    Yes, you are correct. 

    What the arrangements needs to be, if you are agreeing to have offsetting rather than a pension share, wpuld be for  the net sale proceeds would be split, 50% to you, then a further lump sum of £17K to you, then the balance to him, and that would nbeed to be written into the order.

    Have you spekam to a finacial adviser about whether it might make more sense to have a pension sharing order so you are boosting your own pension? 


    All posts are my personal opinion, not formal advice Always get proper, professional advice (particularly about anything legal!)
Meet your Ambassadors

Categories

  • All Categories
  • 342.9K Banking & Borrowing
  • 250K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235K Work, Benefits & Business
  • 607.7K Mortgages, Homes & Bills
  • 172.9K Life & Family
  • 247.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards