1. Pensions are considered a significant asset in divorce settlements. Key types of pensions include:

• Defined Benefit Pensions: These provide a guaranteed income in retirement based on salary and years of service. They are often found in public sector pensions and some private sector pensions.
  
  

• Defined Contribution Pensions: These involve contributions that are invested, and the amount available at retirement depends on investment performance. Examples include personal pensions and workplace pensions.

2. Legal Framework for Dividing Pensions 

In the UK, pensions are subject to division as part of divorce proceedings:

• Pension Sharing Orders: A Pension Sharing Order is a court order that divides the pension. This order specifies the percentage of the pension to be transferred from one party to the other. The receiving party then has their own pension account with the transferred funds.
  
  

• Pension Attachment Orders: This order directs that a portion of the pension income is paid to the ex-spouse when it comes into payment. This type of order is less common due to its limitations compared to pension sharing.
  
  

• Offsetting: The value of the pension can be offset against other marital assets, such as the family home or savings. This method aims to balance the overall asset division without physically dividing the pension.

3. Valuing Pensions

Valuation of pensions involves:

• Actuarial Valuation: For defined benefit pensions, an actuarial valuation determines the present value of future pension payments. This valuation considers factors such as age, salary, and years of service.
  
  

• Pension Statements: For defined contribution pensions, the value is based on the current balance of the pension pot. You can obtain this information from your pension provider.

4. Implementing Pension Divisions

Once the division is agreed upon, it must be implemented:

• Pension Sharing Order Execution: Ensure the Pension Sharing Order is properly executed by working with the pension scheme administrator. This involves transferring the agreed percentage of the pension into a separate account for the receiving party.
  
  

• Administration and Paperwork: Complete all required paperwork and ensure that the pension scheme administrator processes the division correctly.

5. Impact on Future Retirement Planning

Dividing pensions affects retirement planning:

• Adjusting Plans: Review and adjust your retirement plans based on the new pension arrangements. This may involve recalculating retirement needs and adjusting savings strategies.
  
  

• Increased Savings: If the pension division affects your retirement funds significantly, consider increasing contributions to other retirement savings vehicles, such as ISAs or personal pensions.

6. Tax Considerations

In the UK, pension divisions have specific tax implications:

• Tax Implications of Transfers: Transfers of pension assets between spouses as part of a divorce are generally not subject to tax. However, it is essential to ensure that the transfer is handled correctly to avoid unintended tax consequences.
  
  

• Future Taxation: Be aware of the tax implications when withdrawing from the pension in the future, as pension income is subject to income tax.

7. Seeking Professional Advice

Given the complexity of pension division, professional advice is highly recommended:

• Family Law Solicitor: A family law solicitor can guide you through the legal process of pension division and ensure that your interests are protected.
  
  

• Pension Specialist: Consulting a pension specialist or financial advisor can help you understand the valuation, division, and management of pension assets, and assist in planning for your retirement.