Pensions & Divorce
There are so many different things to consider when you are going through a divorce or a dissolution, it is a very distressing time and emotions are running high, which can add to confusion.
During this time, pensions are likely to be the last thing on your mind, however it is important to include them in your planning when considering how your assets will be divided up.
How you divide your assets will depend on whether you were married or in a civil partnership:
You might be entitled to some, or all, of your partner’s pension if you are divorcing or dissolving your partnership, this will be decided on by the court.
If you separate without legally divorcing or dissolving your civil partnership, you would not be entitled to a share of your partner’s pension. However, you may be entitled to a spouse’s pension or lump sum when they die.
If you’re not married or in civil partnership and separate from your partner, neither party would automatically be entitled to a share of the other’s pension.
What are your options when divorcing or dissolving a partnership?
Pensions offsetting
The value of any pensions is offset against other assets.
For example, one party may get a larger portion of the family home in return for the other keeping their pension.
This can offer a simple, clean break which doesn’t alter existing pension arrangements.
Pensions Sharing
A percentage of one person’s pensions is transferred to the other, allowing them to manage it as they wish.
This can be transferred into a pension in their name which can be a new or existing pension, or they might have the option to join the scheme the pension has come from. This will be dependent on the pension scheme rules.
Whilst this option also offers a clean break, consideration needs to be made for life cover or death benefits.
Pension Earmarking/Attachment Orders
One party agrees to pay a percentage of their own pension to their ex-partner when they start taking income from their pension.
You can get an income, a lump sum or both, however you will not be able to access any payments before your ex-partner starts accessing their pension.
This option doesn’t offer a clean break because the person who owns the pension will always control when and how it’s used at retirement.
We advise you contact our team as early as possible in your divorce or dissolution process to ensure you receive the best advice possible. Not only do we have experts in this area, we also have links with a number of solicitors who would be able to assist you.
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