Cash or pension

**1. Understand Your Options**

* **Pension Sharing:** A court order that splits the pension fund at the time of divorce, giving each party their own independent pension pot.
* **Pension Offsetting:** The value of the pension is offset against other assets, such as the family home. One party keeps the pension, the other receives a greater share of other assets.
* **Pension Attachment (Earmarking):** A portion of the pension is paid to the ex-spouse when the pension holder starts to draw benefits. Less common now due to complexities.

**2. Factors to Consider**

* **Value of the Pension:** Get an accurate valuation of the pension(s). Defined benefit (final salary) pensions require specialist valuation.
* **Your Age and Health:** Consider your life expectancy and potential healthcare costs in retirement.
* **Financial Needs and Goals:** Assess your current and future income needs, including housing, living expenses, and any future plans.
* **Other Assets:** Factor in the value of other assets being divided, such as property, savings, and investments.
* **Tax Implications:** Understand the tax implications of each option. Cash might be subject to capital gains tax, while pensions have tax advantages.
* **Investment Growth Potential:** Pensions have the potential to grow over time through investments.
* **Control and Flexibility:** Cash offers immediate access and control, while pensions have restrictions on access.

**3. Seek Professional Advice**

* **Financial Advisor:** Can provide personalized advice on the long-term financial implications of each option, considering your individual circumstances and goals.
* **Pension Specialist:** If dealing with complex pensions (e.g., defined benefit schemes), a pension specialist can provide expert guidance.
* **Solicitor:** Will ensure the chosen option is legally sound and incorporated into your divorce settlement agreement.

**4. Important Considerations**

* **Long-term vs. Short-term Needs:** Cash might seem attractive now, but a pension provides income security in retirement.
* **Inflation:** The value of cash erodes over time due to inflation. Pensions offer some protection against inflation.
* **Future Circumstances:** Consider potential future events like remarriage or ill health, which might affect your financial needs.

**In Summary**

Choosing between cash and pension in a divorce requires careful consideration of your individual circumstances, financial needs, and long-term goals. Seeking professional advice from a financial advisor, pension specialist, and solicitor is crucial to making an informed decision that protects your financial future.