Pensions are perhaps the most significant asset that silver splitters need to be aware of. You should seek legal advice to protect your entitlement to your pension or that of your partner.
There are many types of pensions with different benefits and terms. Pensions can be shared based on value or income, and when approaching retirement age, it is more usual to split the pensions on the basis of income.
Furthermore, the pension freedoms allow those accessing their pension from the age of 55 greater flexibility of their options, and when looking at this, there may be tax implications to be aware of.
If one of you has drawn your pension and the other has not, it can create an income gap. In those circumstances, options may include further employment, supplementing payments, deferring the pension share or further liquidity of pensions.
It is important not to overlook the state pension. The basic state pension cannot be split or shared on divorce. However, the additional state pension or protected payment element of the new state pension can be shared.
You may have a pension outside of the UK, and in those circumstances, you cannot obtain a pension share in the UK, so alternative options will be needed.
This may all seem confusing, which is understandable. It is often sensible to invest in independent financial advice and a pension sharing report by an actuary. The report can consider all pensions (including the state pension) and advise on the best options for sharing or offsetting your pension, enabling you to make decisions that best protect your retirement income and plans.