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Pensions for divorcees explained

Tim Heming
Written by  Tim Heming
Jonathan Leggett
Reviewed by  Jonathan Leggett
5 min read
Updated: 11 Apr 2024

Divorce proceedings usually result in splitting the wealth of the estate between the two individuals. But what does this mean for your pension? Our guide explains

While no-one plans on it, marriages and civil partnerships don’t always work out.

If you find yourself in this situation, it’s worth understanding what happens with your pension, particularly because pension pots can be some of the most financially valuable assets in your household.

Before looking at what happens if a married couple divorces, let’s first look at pension rights for married couples.

How do pensions work for married couples?

There’s no such thing as a joint pension, all pensions are held in one individual's name. This means that married couples can save into their own individual pensions allowing each spouse to manage their own retirement savings independently.

How a married couple spends the income from their individual pensions when it comes to retirement however, is up to them.

If each individual chooses to drawdown from their pension, they have the choice to withdraw the money into a personal or a joint account, so long as the individual pension plan owner is named on the account..

Both personal or workplace pensions may allow one partner to receive a portion of the other's pension in the event of death.

You can usually add beneficiaries to your defined contribution pension, including how you’d want the pension pot to be split, this could be your spouse, children or anyone you’d like to inherit your funds.

couple arguing

How are pensions handled during divorce proceedings?

During divorce proceedings in the UK, pensions are considered marital assets subject to division in the same way as property, savings and investments.

Both spouses must disclose pension details, and courts may issue orders to ensure equitable distribution. Legal advice is crucial to navigate this complex subject and secure fair outcomes for both parties.

What are my pension options after a divorce?

During divorce proceedings in the UK, pensions are considered part of the matrimonial assets to be divided between spouses. Here's how pensions are typically handled:

Pension sharing. The court may order a pension sharing arrangement where a portion of one spouse's pension is transferred into a pension scheme in the other spouse's name. This provides both spouses with their own pension assets post-divorce

Pension offsetting. Alternatively, the court may offset the value of one spouse's pension against other assets, such as property or savings.

This can be a way to achieve a fair division of assets, but it may result in one spouse retaining more pension wealth than the other

Pension attachment or earmarking. This is where a portion of one spouse's pension income is paid to the other spouse upon retirement. This arrangement may be suitable if one spouse has a significantly higher pension income than the other

Do pensions have to be disclosed during divorce proceedings?

Yes, both spouses must disclose details of their pension arrangements, including the cash equivalent transfer value (CETV) of their pensions.

This allows the court to assess the value of the pensions and make fair decisions regarding their division.

Divorcing couples should seek legal and financial advice to ensure that pension assets are valued accurately and divided fairly and in accordance with the law.

What rights do I have to my ex-spouse’s pension benefits after divorce?

Your rights to your ex-spouse's pension benefits depend on various factors, including the type of pension scheme and the agreements reached during the divorce proceedings.

These might include a pension sharing order, which typically involves a transfer of pension funds from your ex-spouse's scheme into a pension scheme in your name.

It could also be a pensions attachment order, where you have a right to a portion of your ex-spouse's pension income when they retire.

Another alternative is that the value of your ex-spouse's pension may be offset against other matrimonial assets, such as property or savings, as part of the divorce settlement.

Consulting with a solicitor experienced in family law and pensions can help ensure that your rights are protected and that any agreements reached are fair and equitable.

Can you agree to a share of pensions without going to court?

Yes, you can typically avoid court hearings for financial resolution by mutually agreeing on how to divide assets and finances with your ex-partner.

For your agreement to hold legal weight, you'd need to apply for a 'consent order' in England, Wales, and Northern Ireland, or a 'qualifying agreement' in Scotland.

If mutual agreement isn't possible, seeking a 'financial order' from the court remains an option.

What factors decide how pension assets are divided during a divorce?

A long list of factors can be considered when deciding how pension assets are divided during a divorce. These include:

  • Duration of marriage. This can affect the division of pension assets, with longer marriages often leading to more equitable distribution

  • Contributions. The contributions made by each spouse to the pension during the marriage, including both financial and non-financial contributions, may be considered

  • Pension value. The current and future value of the pension assets, including any growth or appreciation, will influence the division

  • Income disparity. Differences in income and earning potential between the spouses may factor into the division of pension assets to ensure a fair outcome

  • Other assets. The presence of other marital assets, such as property or savings, may affect how pension assets are divided to achieve a balanced distribution

  • Age and health. The ages and health statuses of both spouses may impact their respective needs for financial security in retirement

  • Financial needs. Consideration of each spouse's financial needs and obligations, including child support or spousal maintenance

  • Pension type. Different types of pensions (eg. defined benefit vs defined contribution) may require different approaches to division, taking into account factors such as accessibility and liquidity

  • Agreements. Any agreements or arrangements made between the spouses regarding the division of pension assets, whether through mediation, negotiation, or collaborative law, may impact the final outcome

What happens to my pension if I dissolve my civil partnership?

If your civil partnership is dissolved, pensions are treated in the same way as they would be for a divorced marriage.

How much of your partner’s pension you’re entitled to, or vice versa, will depend on the dissolution agreement.

If you’re in a civil partnership and separate, you have the same rights as a separated married couple.

In this case, unless you legally dissolve your civil partnership, you won’t be able to share your partner’s pension, but you might still be entitled to your civil partner’s pension or a lump sum when they die.

If you’re not married or in a civil partnership, and separate, neither party is automatically entitled to a share of the other’s pension.

The only exception to this in the UK is in certain situations in Scotland, where cohabiting individuals have the same legal protection as civil partners.

Does divorce change how much state pension I am entitled to?

Divorce does not directly affect the amount of state pension you receive in the UK.

Each spouse retains their own entitlement based on their National Insurance contributions, regardless of marital status.

However, divorce may impact other pension benefits, such as survivor benefits, if applicable.

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