Pension Sharing On Divorce

Do I have to share my pension with my ex when we divorce?

Every divorce situation is unique. Often pensions are the largest asset after the home, so they should be considered in all cases. But there are some circumstances where they might be disregarded. 

Say, for example, a couple is separating and they have very similar pension provisions. In that case they might not need to do any sharing or splitting – but I would advise both parties to disclose the details to be considered.

How does splitting a pension during a divorce work? 

There are three ways that a pension can be split on divorce. The first one is quite simple and is called offsetting. That’s where the value of your pension or that of your spouse – or part of it – is offset against other assets from the marriage. 

It could be that the value of a pension is offset against a large investment portfolio. Then the pension wouldn’t be split at all. The pension owner would keep ownership and the other party would get a larger split of the alternative assets. 

Secondly, you could have attachment orders, although these aren’t often used anymore. Here, the pension, income or lump sums are earmarked for the spouse for later on in life – usually when the pension member takes their benefits. There are some problems with that, so it’s best to get advice before agreeing to it. 

Finally, there’s pension sharing. This is where pension benefits are split at divorce, and the person receiving the share of the pension has the pension credit and the person who is having their pensions shared has a pension debit. That’s more of a clean break. 

Can I get half of my partner’s pension in divorce?

Yes, it’s possible, but it all depends on what’s fair in terms of dividing the assets.

Is my spouse or civil partner entitled to my state pension?

No – your basic state pension or the new state pension can’t be shared. However, there are some additional state pension benefits that can be shared. People may remember Serps or S2P – anything that increases your state pension above the basic income can be shared. Sometimes it’s called additional state pension or protected payments. 

However, if those benefits are shared and then the spouse or partner that’s taken the share then goes on to remarry or enter another civil partnership, those benefits would be lost. 

How could getting divorced affect my pension and retirement income?

It depends on your situation. If your pensions are subject to a sharing order, it will reduce your pension benefits and ultimately reduce your overall retirement income. Working with a financial advisor can help identify whether that shortfall can be made up before retirement.

What about pensions that are already paying out?

All finances held in single names and joint names are considered in a divorce. It’s definitely possible that your pension and payment will be considered as part of the financial award to your ex-partner.