What happens to my pension if I get divorced?

Pensions are often a very valuable asset, and something you (and your partner) may be relying on in respect of your long term future.  As with your other assets, your pension will be taken into account as part of any overall financial settlement when you get divorced or dissolve your civil partnership. 

You will need to know the true value of your pension to be able to decide how it should be dealt with.  Sometimes, it is necessary to instruct an expert actuary to give accurate information about both the capital value of your pension and the future income it is likely to generate.  In other cases you can request the cash equivalent value (CEV) from your pension provider. 

There are various court orders which can be made specifically in relation to pensions, including:

Pension sharing - the court can make a pension-sharing order which essentially means that a percentage of your or your partner's pension is hived off and transferred into a separate pension in the name of the other of you. This in effect achieves a clean break in respect of your pension as the transferred fund is treated and dealt with entirely separately after you are divorced.

Offsetting – the value of your pension can be offset against other assets, so that you keep all your own pension, but your spouse is compensated by being given a greater share of other assets.

Earmarking – all or part of your pension is earmarked to be paid to your spouse when the pension is drawn.

Find out more about financial settlements on divorce or civil partnership dissolution, and what the court will take into account.

How are survivor pensions treated for same-sex couples?  

There has been an important recent decision about survivor pension rights for same-sex partners.  In Walker v Innospec Ltd [2017], an employer refused to pay a survivor's pension to their employee's same-sex spouse because the pension was in place before the date in 2005 that civil partnerships were introduced in the UK. The Supreme Court ruled that this was illegal and that same-sex spouses in a marriage or civil partnership should benefit from the same pension rights as different-sex spouses.

This means that if you have a pension scheme with fine print which provides same-sex partners with 'restricted benefits' after 5 December 2005 then your employer should be actively reviewing its policy with a view to changing this. If you would like us to check your pension scheme rules then please do let us know and we are happy to do so.

Have we answered your question? Would you like advice on your personal circumstances?

Email us at hello@ngalaw.co.uk or call on 020 3701 5915 and we will explain how we can help.