Pension and divorce FAQs

Frequently Asked Questions about pensions and divorce 

Pensions are often the biggest asset apart from the family home, and are taken into account when consideration is given to resolving financial matters on a divorce or dissolution of a civil partnership.

Frequently Asked Questions

• What happens to my pension if I get a divorce?
• What information about my pension do I need to obtain?
• Can a pension in payment be shared?
• Does divorce affect my State Pension?
• Can overseas orders be made against UK pension schemes?

What happens to my pension if I get a divorce?

Pensions can be dealt with in a number of ways following a divorce, depending upon the particular circumstances of your case.

• Pension sharing – this is where one spouse receives a percentage share of their ex-partners pension/s. This is either transferred into a separate pension scheme in their name (known as an external transfer) or into a separate pot within their former partner's existing scheme (known as an internal transfer).
• Pension offsetting – this is where the value of a pension is offset against other assets. For example, one spouse may receive a greater share of the family home or savings to compensate for the lack of pension provision.
• Pension attachment (formerly 'earmarking') – this means that a percentage of the pension is set aside for the ex-spouse to claim on retirement. This is not necessarily the best option and pension sharing is often the preferred method. Attachment benefits are not necessarily watertight and are lost if the ex-spouse remarries or the member spouse dies.

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What information about my pension do I need to obtain?

You should start by making a list of the pensions you currently contribute to with your former partner, as well as any previous pensions you may have. Most pension providers provide an annual statement which is a useful starting point.

A CETV (Cash Equivalent Transfer value) or CEB (Cash Equivalent Benefit) statement details the capital value of the pension benefits (income and potential lump sum) that have accrued to date or which are in payment.

With money purchase schemes, the CETV statement details the transfer value of the funds that have accrued to date and this may be different to the actual fund values depending on the scheme.

CETV statements of final salary schemes rarely reflect the true value of the pension rights. For example, if the scheme is underfunded the transfer value may be reduced to reflect this. This is a very complex area and professional advice is important.

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Can a pension in payment be shared?

Yes. It will depend on the rules of the pension arrangement, as to whether or not, the receiving spouse will be able to take a lump sum from any benefits upon transfer. This will also depend on whether or not any lump sum has already been taken. 

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Does divorce affect my State Pension?

The Basic State Pension cannot be shared. However, divorced couples can use their former spouse or civil partner's National Insurance contributions to increase their basic State Pension. This will not reduce the amount of State Pension the other person recieves.

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Can overseas orders be made against UK pension schemes?

In the vast majority of cases, UK pension providers will not implement orders made in different jurisdictions unless a ‘mirror’ Order is obtained in the UK. This is usually a straight forward application to the court and we can help with this application.

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For more information about pensions and divorce please contact Samantha Hickman in our Divorce & Family Law team on 0117 314 5435.