De Rose Wealth Management Ltd

Associate Partner Practice of St. James's Place Wealth Management

Pensions in Divorce

If you are in the process of getting divorced or dissolving your civil partnership, then your pension should be included in your financial settlement.

Even when you agree on a settlement, it should be confirmed through a court order.

You should always get legal advice about your pension if you’re divorcing or dissolving your civil partnership. Particularly if you’re remarrying and haven’t previously agreed on a financial settlement.

How the courts deal with pensions in Divorce / Dissolution of Civil Partnership

When a marriage or civil partnership ends, courts deal with the pension arrangements in one of 3 ways.

  1. You’re given a percentage share of the value of your former partner’s pension pot at time of divorce
  2. This is known as pension sharing. The money that you get from the pension pot of your former spouse or civil partner is then legally treated as your pension.

  3. The value of a pension is offset against other assets
  4. This is known as pension offsetting. For example: you keep your pension and your former spouse or civil partner keeps the home.

  5. Some of your pension is paid to your former partner in the future

This is known as pension attachment or sometimes pension earmarking. This is when a payment is made directly from one person’s pension pot to their former spouse or civil partner. Under this arrangement, money from the tax-free lump sum can also go to your former spouse or civil partner. These payments are only made when the pension holder starts to draw their pension benefits.

If the outcome is Pension Sharing, and if it is possible, you may wish to make a clean break from your ex and transfer the money into your own personal pension plan.

In most cases, the ceding scheme will insist that you receive qualified advice before the transfer of pension funds can be made to a new or existing personal arrangement. In any case if this is not a stipulated requirement, you may feel you can benefit from expert advice on all your options.

I have over 20 years experience in dealing with pensions in divorce which includes all types of pension schemes and arrangements and am happy to provide advice on this subject.

If you require specific advice on any issue relating to Pensions and Divorce, then please contact me at your earliest convenience.

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