Offsetting is the process by which your right to receive a present or future pension benefit is traded for capital or money now. For example, you might forego a pension in return for a larger share of the proceeds of sale of your house.
However, you need to think carefully about any settlement along these lines because liquid assets and pensions are different in nature. The difficulty lies in comparing very different types of asset e.g. a pension as a future whole-of-life income stream, against cash, housing or other non-pension assets. Offsetting of pensions needs to be calculated carefully; it is important that you know the value that you might be losing, retaining or acquiring.
What is a pension attachment order?
A Pension Attachment Order against your spouse’s pension has the effect of redirecting part or all of the pension income to you, but only when it comes into payment. However, there are certain disadvantages including the fact that it cannot provide for a clean break and that the income is lost if your ex-spouse dies, or if you remarry. You also can’t receive any payment until your ex-spouse decides to draw their retirement benefits, which they might deliberately delay for tactical purposes. For these reasons, Pension Attachment Orders are now very rarely made.
When might a pension attachment order be used?