In divorce or dissolution, the pension can be the biggest asset after the family home. You can split pensions several ways, so it’s worth understanding the options before deciding what’s best for you.
Pensions you can divide
Start by listing all the different pensions you and your ex-partner have, and get a copy of the rules for each scheme.
This could include:
- personal pension schemes (includes Stakeholder and Self Invested Personal Pensions)
- schemes you have through work
- any part of your entitlement to the new State Pension that is ‘protected’ and built up under the old pre-April 2016 Additional State Pension not the basic entitlement to new State Pension).
What exactly can be divided depends on where in the UK you’re divorcing or dissolving your civil partnership.
In England, Wales or Northern Ireland
The total value of the pensions you have each built up is taken into account.
This doesn’t mean only the pensions that you or your ex-partner built up while you were married or in a civil partnership, but all of your private or workplace pensions.
In Scotland
Only the value of the pensions you have both built up during your marriage or civil partnership is taken into account.
This means that anything built up after your ‘date of separation’ or before you married or became civil partners doesn’t count.
Splitting your pension after you’ve retired
If you and/or your ex-partner have retired, the pensions can still be split, but the rules are different.
It isn’t possible to take a lump sum from your ex-partner’s pension if they are already receiving an income from it.
This applies whether your ex-partner took a lump sum or not.
Do you need a court order?
Only a court can make a:
- pensions sharing order
- pensions attachment or earmarking order
You and your ex-partner can agree to offset your pension without a court order.
You and your ex-partner can ask the court to approve an individual agreement and turn it into a court order.
You should get advice from a family lawyer who specialises in pensions in divorce or dissolution as the rules are complicated.
How you can split pensions
This table shows how workplace, personal and other private pensions can be divided.
The rules of the pension scheme will help inform you which of these options will work best for you.
Get professional advice from a lawyer and/or a financial adviser before you act.
| Option | What is it? |
|---|---|
| Pension sharing order | You get a percentage share of any one (or more) of your ex-partner’s pensions. This is either transferred into a pension in your name or you can join your ex-partner’s pension scheme.It will depend on the pension scheme rules as to which method they allow. If the pension is transferred to you and you don’t already have your own pension, you’ll have to set one up. |
| Pensions offsetting | The value of any pensions is offset against other assets. For example, you might get a bigger share of the family home in return for your ex-partner keeping their pension. |
| Deferred pension sharing (not available in Scotland) | This is used if your ex-partner’s pension is being shared. They have already retired and are receiving their pension, but you haven’t retired and are too young to be paid a pension. You both make an agreement to share the pension at a later date. This can be more complicated to arrange than an ordinary pension sharing order, so legal costs can be higher. |
| Deferred lump sum (not available in Scotland) | You get a lump sum payment from your ex-partner’s pension when they retire. |
| Pensions attachment order (called ‘pensions earmarking’ in Scotland) Individual agreement | You get some of your ex-partner’s pension when it starts being paid to them. It’s not compulsory to share pensions in a divorce. As a couple you can come to an informal agreement, but it will need to be legally documented. It’s recommended that you seek financial and legal advice if you decide to take this option. |