Guidance on divorce and pensions

Divorce and separation

You may not realise it but your pension must be included in the financial settlement if you divorce. Unfortunately, failing to plan for this can have a serious impact on your future financial position.

A new document published by The Pensions Advisory Service (TPAS) called Divorce, Dissolution and Separation: Impact on pensions explores this topic and provides useful guidance.

Key points made in the guidance include:

  • If you are married or in a civil partnership and divorce or dissolve your civil partnership, you could be entitled to some, or all, of your partner’s pension.
  • If you are unmarried and separate from your partner, you will not automatically be entitled to a share of his or her pension (there is no such thing as a ‘common law marriage’).
  • If you are married or in a civil partnership and separate without divorcing or dissolving your civil partnership, you are not entitled to formally share your partner’s pension.

Topics explored in the guidance include:

  • Options when divorcing or ending your civil partnership (pension offsetting, pension earmarking/attachment orders or pensions sharing orders).
  • Death benefits.
  • Delays and pension sharing orders.
  • Mistakes and pension sharing orders.
  • Things that could go wrong: earmarking/attachment orders (pension freedoms, reduced pension benefits, life changes).
  • Other things to consider (pensions already in payment, public sector pensions schemes, overseas pensions, change in cash equivalent value, lifetime allowance and lifetime allowance protection).

Gaby Hardwicke Family Law Services Partner Debra Frazer commented: “The new guidance provided by TPAS is extremely useful in highlighting the current position regarding pensions and debunking some of the myths that surround financial issues on relationship breakdown, in particular by underscoring the fact that there is no such thing as a ‘common law husband and wife’.

“Many people who live together and do not formally marry or enter into a civil partnership believe that they will be automatically entitled to receive a share of their partner’s assets, which may include part of their pension, when their relationship breaks down. This is, in fact, not the case.

“Couples, whether they are married or not, or are civil partners, need to take professional legal advice as to their legal entitlement when they separate.”

Expert legal advice on divorce or separation and pensions

For expert legal advice on divorce, civil partnership dissolution or separation and pensions please contact one of our Family Law Partners:

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