What Happens To My Pension When I Divorce?

By Carlin Peton

It may come as a surprise to know that in the UK, 71% of divorcees do not discuss pensions. Given that retirement plans are usually the greatest asset in marriage, this is often very damaging and rather nonsensical. It is therefore important couples have a good understanding of how their marital assets will be affected during a divorce. In this series, we look at pensions and divorce

Did you know that 18% of divorced retirees have no private pension savings?

All too often, we hear from individuals who realised just how costly it can be to ignore retirement plans as part of the divorce settlement. Or perhaps, they sought the counsel of an inexperienced Solicitor and are now faced with splitting their pension with their ex-partner. In both cases, ignoring your pension is costly, particularly when you come to retire and realise your partner is now entitled to half your pension!

Why is your ex-partner entitled to your pension?

The theory is simple. A pension earned during your marriage is classed as a marital asset. If one half of the couple has no pension, either because they have not worked or had taken time off work to raise children, the other party is responsible for funding their retirement.

With recent statistics showing 16,000 over 60s separated in the UK in 2011, it is important you get a good understand of pensions and divorce.

What does the law say about pensions and divorce?

Generally, pensions should be split 50/50 in a divorce.

Your partner, or you will need to request the pension value during the mediation process. You may feel inclined to withhold this information however this is really important as the courts will not like you holding this information.

How to split a pension

There are many ways to split a pension.

  1. Pension offsetting

People generally want to keep their pension and using this method they can. Instead, they offer other assets such as property. This way is the most common way people decide to split their pensions

  1. Earmarking

This is less common. It essentially means that when it comes to the topic of pensions and divorce, you’ll get a share of your ex-partner’s pension when it starts getting paid

  1. Pension sharing

You can share up to 100% of your pension with your ex-partner.

  1. Deferred lump sharing

Although this option is not available in Scotland, it enables you to get a one-off lump sum payment if you defer claiming your State Pension for at least 12 months in a row. This includes interest of 2% above the Bank of England base rate.

If you need advice on pensions and divorce please feel free to contact our highly motivated team on our enquiries page or call us on 020 3058 3365.