Pension Offsetting on Divorce

Pension offsetting is the traditional method of dealing with pension rights on divorce and used to be the only way in which pensions could be allowed for in settlements prior to the legislation being introduced to allow pension attachment and pension sharing.

Pension offsetting involves the person with the larger pension rights keeping their pensions intact and their ex-spouse receiving a larger share of the non matrimonial assets as part of the divorce settlement. A common scenario is where one party has little pension saving and where the matrimonial home has a similar value to the pensions would be that the party with less pension provision keeps the matrimonial home and the other party keeps their pensions intact.

The above solution is however not always appropriate as the matrimonial home may be worth significantly less or significantly more than the difference in value of the parties’ pensions, in which case a part offset and part pension share might be an appropriate way to settle the case.