Pensions

How is a pension split in divorce?

If you get divorced or dissolve a civil partnership, your pension assets should be taken into account in the settlement.

In divorce or the dissolution of a civil partnership, the pension can be the biggest asset, after the family home. You can distribute pensions in several ways, so it is important to understand the options before deciding what is best for you.

The total value of the pensions you have each built up are taken into account. This means all of your pensions, not just the ones you or your ex-partner built up while you were married or in a civil partnership. In some circumstances it may be possible to make adjustments to the financial settlement to reflect pensions accumulated outside the period of the marriage.

Divorce and pensions

Your pension should be included in your financial settlement if you divorce or dissolve your civil partnership. You should not remarry until you have reached a financial settlement.

Even when you agree on a settlement, it should be confirmed through a court order or consent order.

You can only share your pension if you are married or in a civil partnership.

Always get legal advice about your pension if you are divorcing or dissolving your civil partnership. This is particularly important if you are remarrying and have not agreed with your previous partner on a financial settlement.

If you have questions about your pension assets please give us a call on a free, no obligation basis, our specialist team will be happy to discuss these and our charging structure with you.

Please call us on 0845 658 6639 or contact us through our enquiry form. All initial enquiries are free and without obligation.

How courts deal with pensions

When a marriage or civil partnership ends, courts deal with the pension arrangements in one of three ways.

• You are given a percentage share of your former partner’s pension pot

This is known as pension sharing. The money that you get from the pension pot of your former spouse or civil partner is then transferred into your own pension pot, and is legally treated as your money.

• The value of a pension is balanced against other assets

This is known as pension offsetting. For example: you keep your pension and your former spouse or civil partner keeps the home or other assets with a similar value.

• Some of your pension is paid to your former partner

This is known as pension attachment or sometimes pension earmarking. This is like a maintenance payment directly from one person’s pension pot to their former spouse or civil partner. The money is not immediately yours, and you lose it if your former partner dies.

Under this arrangement, money from your tax-free lump sum can also go to your former spouse or civil partner.

Basic State Pension

Your basic State Pension cannot be shared if your marriage or civil partnership ends.

Additional State Pension

If you have an additional State Pension, the court could order that this is shared between you if your marriage or civil partnership ends. You lose these rights if you remarry or enter into another civil partnership.

While pensions do not need to be shared, they should not be ignored when deciding how assets should be allocated; pensions are often a couple’s most significant asset, after a house, and can easily be overlooked.

The value of your pension can be obtained from your pension scheme, however, you should be aware that there can be costs for providing this information and any subsequent court orders. These costs must be met by either one, or both, of the parties involved. The scheme administrator and/or pension provider must tell you about any costs at the beginning of the process.

If you live in England, Wales or Northern Ireland, your pension is valued at the date of divorce or dissolution of the civil partnership.