Options for your Pension

There are now three ways in which the Court can take account of pension rights :

• Offsetting against other matrimonial assets
• Pension attachment orders (formerly referred to as "earmarking")
• Pension sharing orders

Offsetting

• Simplest method
• Pension benefits are offset against other matrimonial assets
• Offers clean break
• Useful where the pension values are small, the parties have sufficient pension of their own or the priority is for one spouse to keep the matrimonial home

Attachment

• A Court direction to pay at a later date
• No legal transfer of ownership
• No clean break
• Has not proved popular in practice
• The scheme member remains liable for Income Tax on the total of the pension benefits
• Useful where there is a need for continuing lump sum life cover or tax free cash at retirement is needed by the recipient ex-spouse
• Possible pitfall - control remains with the member

Sharing

• Legal transfer of ownership
• Benefits are divided at the time of divorce
• Clean break
• New option, directly affects pension

In many cases, off-setting will continue to be the preferred option, though sharing is likely to prove more popular than attaching. If a spouse has more than one pension arrangement, each can be treated differently - i.e. if appropriate, an attachment order could be made against one pension arrangement and a sharing order against another.