My husband and I are finalising our divorce. We’ve agreed to settle things amicably, but our lawyers are suggesting we take financial advice before we make decisions about what to do with my husband’s private pension, which has been valued at around £800,000. It’s a personal pension which has gone down in value over the past year because of the financial crisis. We have agreed to share it on a 50:50 basis. Are there any other factors we should be taking into account?

Lowestoft Journal: Jeremy Woodruff, chartered financial planner with Smith & PinchingJeremy Woodruff, chartered financial planner with Smith & Pinching (Image: Smith & Pinching)

Jeremy Woodruff of Smith & Pinching responds:

I think both you and your husband would benefit from discussing your finances with a fully qualified chartered financial planner who understands the divorce process. Better still would be a financial adviser who is a Pensions on Divorce Expert (PODE) to take you through this advice journey and look not just at your pensions but also at the wider picture of your finances.

It is important to identify your needs and targets for your life after your divorce, and to look at these in conjunction with your joint assets. This will then lead to an outcome that is fair for you both. Equalising pension entitlements is just one potential element of your settlement agreement.

There are several different factors that you will need to consider as you build a post-divorce financial plan. These might include your own attitude to investment risk, for example, which may be different for you once you have divorced. Your housing needs and any associated borrowing might also need to be considered.

Your PODE adviser may use lifetime cashflow planning to map out your financial position over the coming years under a number of different scenarios. This might cover different income levels, rates of investment growth and retirement dates, for example.

In the vast majority of cases, your divorce settlement will be binding so there’s unlikely to be any opportunity to revisit the agreement you reach with your husband. I strongly recommend that you take advice from a chartered financial planner at this critical stage to ensure your future needs are covered.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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