Pensions and divorce
Your pension should be included in your financial settlement if you divorce or dissolve your civil partnership.
Even when you agree on a settlement, it should be confirmed through a court order.
If you’re not married, or in a civil partnership, your pension can’t be shared if you separate.
Always get legal advice about your pension if you’re divorcing or dissolving your civil partnership. Particularly if you’re remarrying and haven’t previously agreed on a financial settlement.
How courts deal with pensions
When a marriage or civil partnership ends, courts deal with the pension arrangements in one of 3 ways.
1. You’re 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 legally treated as your money.
2. The value of a pension is offset 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.
3. 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.
Under this arrangement, money from your tax-free lump sum can also go to your former spouse or civil partner.
If you live in Scotland
The options for how courts split pension pots are the same as in the rest of the UK.
There are differences in how pension options are applied in Scotland. Read more about how courts deal with pensions in Scotland.
The State Pension
How divorce affects your State Pension will depend on which State Pension you get.
Basic State Pension
Your basic State Pension can’t be shared if your marriage or civil partnership ends.
Divorced couples can use their former spouse or civil partner’s National Insurance contributions to increase their basic State Pension. This won’t reduce the amount of State Pension the other person receives.
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.
New State Pension
Your new State Pension can’t be shared if your marriage or civil partnership ends.
If you have a ‘protected payment’, the court could order that this is shared between you. This is an additional payment you may get on top of the full State Pension.
Find out more about divorce and pensions or speak to a pension specialist from The Pensions Advisory Service on 0800 011 3797.