Most people, certainly those who are divorcing, are not aware that it is possible to share a pension asset on divorce, much as you would share the family home or savings.
Where both parties have pensions which are not in payment this and when the parties are already above retirement age and drawing pensions this can be easily achieved.
There are problems where the pension is in payment but the parties are under retirement age which often happens with pensions from the Armed Forces. After 22 years’ service this can be drawn and the ex-servicemen will receive a monthly income. However, he or she may only be in his or her 40’s. The Armed Forces Pension Scheme rules allow such a pension to be shared but will not pay to the ex-spouse until they have reached age 55 or 60.
This can mean that the pension is shared now and the ex-serviceman loses the benefit of that income. However, the spouse does not have the benefit of that income for 10 to 20 years, depending on their age. Therefore, they both lose the benefit of that pension income until the time that the spouse is entitled to draw their share direct.
That can in itself lead to a claim that the ex-serviceman pay maintenance to the spouse in the interim. This is despite the fact that the ex-servicemen has already lost a portion of their income, namely from the pension.
There is no easy way around this but there are ways to mitigate the risk and different ways that it can be approached. It all depends upon the personal circumstances of the divorcing couple. It is an area in which good legal advice is needed and also the input of actuaries in most cases.