Pensions In Divorce: Your Questions Answered
After your family home, your pension can make up your largest asset to split in the event of a divorce or civil partnership dissolution.
It’s important you know exactly where you stand with regards to your pension or your ex-spouse’s pension in divorce and we have listed below a few of the most common questions we get asked here at Sinclair Law.
For a more bespoke answer to any question you may about about pensions on divorce, we suggest you book in for a one-on-one complimentary meeting to discuss the exact nature of your case.
Top 5 Questions On Pensions In Divorce
What Pensions Can Be Divided?
If you are wondering the types of pensions that can be shared in divorce or dissolution, we have listed the following below:
This could include:
- Personal pension scheme
- Workplace Pensions
- Additional State Pension (but not the basic State Pension)
What exactly can be divided depends on where in the UK you’re divorcing or dissolving your civil partnership.
For example, if you are living in England, Wales or Northern Ireland, your total pension you have both built up during your lifetime will be taken into account.
This differs from Scotland, where only the total pension value for the period your were married or in civil partnership is taken into account – this means that any pension amount accumulated before marriage/civil partnership and/or during separation is not taken into account.
How Will My Pension Be Split?
Broadly speaking, there are three main ways as to the way your pension may be split.
- Pension Sharing – You get a percentage share of any one (or more) of your ex-partner’s pensions. This can be either transferred into a pension in your name or you can join your ex-partner’s pension scheme. If the pension is transferred to you and you don’t already have your own pension, you’ll have to set one up.
- Pensions Offsetting – The value of any pensions is offset against other assets. For example, you might get a bigger share of the family home in return for your ex-partner keeping their pension.
- Pensions Earmarking – You get some of your ex-partner’s pension when it starts being paid to them. You can get some of the pension income, the lump sum or both. But you can’t get pension payments before your ex-partner has started taking their pension.
If I Am Retired, Will This Affect Any Pension Sharing?
If you and/or your ex-partner have retired, the pensions can still be split, but the rules are different. It isn’t possible to take a lump sum from your ex-partner’s pension if they are already receiving an income from it.
This applies even if your ex-partner took a lump sum.
Will My Pension Be Split On A 50/50 Basis?
In short, not necessarily.
There is no legal requirement for your pension to be split 50/50, however it is worth noting that if no agreement can be reached during the divorce process, the courts will have to determine the percentage. In making their decision, they will usually consider other assets, the finances of each party and any potential retirement benefits.
However, where the retirement benefits are significant the landmark case of White v White (2000) suggests the court should begin with an equal division of the matrimonial assets and only vary from this basis according to the merits of the case. Usually the parties involved will come to an agreement through their solicitors as to the percentage share of retirement benefits, whether this results in offsetting against other matrimonial assets, earmarking or pension sharing.
Is It Compulsory To Share My Pension In Divorce?
Pension sharing is not compulsory and is only one of several options that can be taken during financial relief proceedings to divide the pension arrangements.
The court will consider the needs of both parties and may decide to ignore dividing the members pension rights if the couple are still young, married for a short time or the value of the pensions is too low to justify the costs associated with a pension sharing order.