Thinking about divorce
Finding a way forward
If you’re reading this, then chances are you’ve had to make some very tough decisions recently.
Although nothing about divorce or dissolving a civil partnership is easy, one of the hardest parts is getting to grips with your finances - particularly as they become so entwined over time. It can all seem a bit daunting.
After seeking legal advice to understand how you may be affected and what your rights are, we hope this guide on what could come up during and after the process will help.
This guide does not cover unmarried couples. Living together does not give the same legal rights as being married or in a civil partnership.
Over the course of a marriage/civil partnership, pensions can grow to be substantial, and in UK divorce settlements they are counted as assets.
After seeking legal advice to understand how you may be affected and what your rights are, we hope this guide on how pensions can be split between you and your ex-partner will help.
Remember to change your expression of wish - the named person who will receive your pension payments in the event of your death - as soon as you start seriously considering ending your marriage/civil partnership. You can find out more about how to update your beneficiaries here.
What types of Pensions can be shared in a Divorce?
You'll need to track down any pensions that either of you have ever paid into as a 'member' of a scheme.
The most common personal or company pensions can be shared in a divorce settlement.
But the following pensions cannot be shared:
- Basic State Pension (although Additional State Pension can be shared. This could be built up under the old Sate Pension system and is known as a 'protected payment').
- Graduation pension: this was a top up to the Basic State Pension paid by employees through National Insurance Contributions between 1961 and 1975.
- Widow or widower’s pension that is in payment.
Pensions are shared according to the terms of your divorce. But here are some examples of how they could be split.
Offsetting
You or your ex-partner gets a share of another asset, rather than the actual pensions.
Pension attachment/ earmarking order
A proportion of the pensions are paid directly to you or your ex-partner when the benefit pays out.
Pension sharing orders
A share of the pensions is transferred to you or your ex-partner.
Pensions and divorce FAQs
If you’re currently receiving death benefits from a deceased member’s pension, these cannot be shared when you divorce.
If your ex-spouse reached state retirement age before 2016 you can use their National Insurance contributions to increase your basic State Pension. This won’t reduce the amount of State Pension either of gets. However, you won’t be able to do this if you remarry or enter into another civil partnership before you reach your State Pension age.
If you're already retired and getting divorced or dissolving your civil partnership, it’s best to get financial advice as this is a complicated area.
Important information: This is for information purposes only and the views contained are not to be taken as advice or a recommendation for any product, service or course of action. If you need advice about how any of this information applies to you personally, you should contact an authorised financial adviser. Tax treatment depends on individual circumstances and all pension and tax rules may change in the future. You cannot normally access your pension savings until age 55. This is due rise to 57 in 2028.