Pension sharing VS cash in divorce

caprikid1

When I got divorced I gave my Ex Wife a larger share of the pension POT and kept property instead.

I effectively drew down my pension Tax free although I may be subject to Capital Gains tax but I am sure that is avoidable if I move into it for a sufficient length of time.

If I did it again I suspect I would do the same , courts prefer asset types to be split evenly though.

Albermarle

caprikid1 said:

When I got divorced I gave my Ex Wife a larger share of the pension POT and kept property instead.

I effectively drew down my pension Tax free although I may be subject to Capital Gains tax but I am sure that is avoidable if I move into it for a sufficient length of time.

If I did it again I suspect I would do the same , courts prefer asset types to be split evenly though.

On your last point. I was researching this issue a while ago for a friend. I got the impression that some kind of trade off ( like you did) was pretty much the norm, as it is easier to sort out than each party getting 50% of each asset. The latter would often mean a house sale that could drag on for ages.
It was just the impression I got, maybe wrongly .

Bostonerimus1

One semantic point. People are saying they are "giving" their ex spouse some of the pension pot or money. I think the term "sharing" is more appropriate and accurate if they are mutually owned marital assets. When it comes to pensions, splitting them 50/50 within the pension wrapper is best IMO for simplicity and all the reasons that make pensions such attractive investment mechanisms. If you have to distribute an unequal amount from a pension to buy an ex spouse out of a house then things get complicated and I think advice from solicitors/accountants is required, but there will be accepted mechanisms to determine the values. Also there will be ways of determining any premarital assets.

When I got divorced we sold the house and it was easy to divide our assets 50/50. We came into the marriage as penniless students so premarital assets were minimal and ignored. When it came to our possessions we just drew cards and highest card picked first and we alternated until we didn't want anything else.

Albermarle

One semantic point. People are saying they are "giving" their ex spouse some of the pension pot or money. I think the term "sharing" is more appropriate and accurate if they are mutually owned marital assets

Sharing might be the right word in some cases, whilst in others a bitter battle might be a more appropriate phrase. ( no direct personal experience though )

If you have to distribute an unequal amount from a pension to buy an ex spouse out of a house then things get complicated and I think advice from solicitors/accountants is required, but there will be accepted mechanisms to determine the values

Firstly sometimes DB pensions are involved and to share these, the pension company needs the right legal documents. Not really a DIY thing. In any case even if the couples are not at each others throats, a solicitor is often needed, if no other reason than most people are pretty poor with financial issues so would struggle to sort it out themselves.

Bostonerimus1

Albermarle said:

One semantic point. People are saying they are "giving" their ex spouse some of the pension pot or money. I think the term "sharing" is more appropriate and accurate if they are mutually owned marital assets

Sharing might be the right word in some cases, whilst in others a bitter battle might be a more appropriate phrase. ( no direct personal experience though )

If you have to distribute an unequal amount from a pension to buy an ex spouse out of a house then things get complicated and I think advice from solicitors/accountants is required, but there will be accepted mechanisms to determine the values

Firstly sometimes DB pensions are involved and to share these, the pension company needs the right legal documents. Not really a DIY thing. In any case even if the couples are not at each others throats, a solicitor is often needed, if no other reason than most people are pretty poor with financial issues so would struggle to sort it out themselves.

When assets are jointly owned like pensions then I think sharing is the right word, even if the divorce is bitter, but I think the idea of "giving" doesn't come from a really bad place, just the erroneous feeling that the higher wage earner has more ownership of assets produced by their work.

Yes DB pensions are a difficult problem as they can't be simply split in the here and now and a clean break made.

Albermarle

Yes DB pensions are a difficult problem as they can't be simply split in the here and now and a clean break made

A clean break is possible. Often one party is given a fixed share of the pension income built up, either for payment now or in the future. The point is that it is not something you can DIY and just tell the provider how you want it done. They need something more official/legal/signed .

Bostonerimus1

Albermarle said:

Yes DB pensions are a difficult problem as they can't be simply split in the here and now and a clean break made

A clean break is possible. Often one party is given a fixed share of the pension income built up, either for payment now or in the future. The point is that it is not something you can DIY and just tell the provider how you want it done. They need something more official/legal/signed .

I agree. A DC pot has a definite current value that can be split and separately invested, a DB pension will need actuarial calculations etc.

eastcorkram

Bostonerimus1 said:

Albermarle said:

Yes DB pensions are a difficult problem as they can't be simply split in the here and now and a clean break made

A clean break is possible. Often one party is given a fixed share of the pension income built up, either for payment now or in the future. The point is that it is not something you can DIY and just tell the provider how you want it done. They need something more official/legal/signed .

I agree. A DC pot has a definite current value that can be split and separately invested, a DB pension will need actuarial calculations etc.

In your case, you said what you did with the house, and other physical items. What happened with the pensions?