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House vs Pension?(9 Posts)
If both house and ex's pension pot are valued at the same roughly, let's say 100k each for easiness, and assets are to be split 50/50, are both of these actually considered to be worth the same in court? Would it be fair for one person to just keep the pension and the other one the house? I seem to remember that I read somewhere that £1 of pension doesn't have the same value as £1 of house or cash as the pension isn't accessible but I can't find any information on this. Can anyone help me make this clearer in my head please ?
Probably not. You need proper legal advice, but a pension pot can't be accessed until at least age 55, and is then taxable after the first 25%.
I never understand people who say a pension is worth less than any other asset.
£100k in a pension is worth exactly £100k to me.
So what if it can't be accessed till 55? It's still £100k
This is the thing. Solicitors are involved but it was never mentioned that cash and pension might not be worth the same £ for £. So I'm just wondering if my solicitor is rubbish and how this has gone for other people.
Wouldn't inflation erodthe value of the pension, so 100k today won't be worth that in the future. And then there is the tax on it as PP mentioned. In my mind I wouldn't say they're equal in value in that case.
Follow up q, if pensions are split between the couple is it the value today that the say wife, would get or is it the value at retirement?
A factor is the type of pension, money purchase or final salary, ages and if the pension has returns which could offset inflation.
Pensions are considered illiquid and therefore not available for house purchase and in that case you have to factor mortgage which has a cost of borrowing.
Solicitors ime tend to only have the experience of their previous cases so you need a large family law firm who have lots of court experience, through barristers, to get a view on what judges may rule.
"are both of these actually considered to be worth the same in court?"
Not really. One is cold hard cash now, the other is an income stream in later life (and the current cash value, especially in some public service pensions is notional anyhow - there's nothing to be drawn out and spent on a new house)
So needs - immediate and long term - both must to be considered to work out what is fairest.
You need individual advice in your specific circumstances. You need to ask your solicitor about the points which concern you, and if you are not happy with their answers, consider if you should switch. (finding a solicitor you are confident in the the real purpose of the free half hour).
Is your solicitor SHL above?
Assuming the pot actually is held as in investment funds e.g defined contribution:
If you were to cash in the pension you would pay tax at your marginal rate on 75% of it
You would usually pay more tax due to tax code applied at the point of payment and have to reclaim difference (depends on your tax rate)
You also have to be 55 and it will limit the amount of tax free pensions savings you can have in future into other DC pension schemes
There are also potential charges associated with cashing it in and administering the order but I suppose selling a house has its costs too
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