What happens to my pension if I get divorced?
Getting a divorce can be a trying and confusing moment in one's life, during which there are many questions to be answered. Your pension might not be at the top of your list of priorities but it could be one of your most valuable assets.
The decisions you make about your pension during a divorce can have a direct impact on how much income you’ll receive when you retire, so it’s useful to understand your options.
Court orders
When you get divorced, your pension forms part of the matrimonial asset ‘pot’ that’s considered when deciding what should be shared between you and your former spouse, and how it should be shared.
If you both agree on how your assets should be shared, you can get a ‘consent order’ with the help of a solicitor and ask the court to approve it. If you can’t agree on how to share the assets, you can apply for a ‘financial order’, and a court will decide for you.
It’s important to note that both types of court order can help to protect you against claims on your pension that your ex-partner might make in the future.
Ways your pension can be shared during a divorce
There are three ways a pension can be shared as part of a financial agreement.
-
Pension offsetting
Pension offsetting is when the value of your pension is offset against other marital assets. For example, one of you might end up keeping the entire pension, while the other receives assets of equal value, like property, cash, or investments.
-
Pension sharing
Pension sharing is when your pension is divided into two separate pots – one for you and one for your ex-spouse. Usually, your ex-spouse’s pot will be transferred out to another pension scheme. This option leaves you both with your own individual pots when the divorce is finalised.
-
Pension earmarking (aka pension attachment order)
Pension earmarking is when pension benefits are split with your former spouse once your pension starts being paid. In this case, you keep control of your pension a proportion of your pension benefits are directed to your ex-spouse.
Help and support
If you’re getting divorced, you should seek professional advice to help you understand your options. A solicitor specialising in family law will be able to help you decide what your next steps should be. You might also benefit from financial guidance or financial advice to understand your options.
Related news & insights
-
Risk & Warnings
The pension options available to you have certain risks that you need to consider. -
What is the impact of opting out of my pension?
With the cost of living still putting the squeeze on finances, opting out of your workplace pension contributions might seem an appealing way to save a bit of extra cash. But did you know that this could have a surprisingly large impact upon your retirement plans? -
Do you know what income you might need for retirement?
It’s good to have an idea about what you want to do in your retirement, so you have a better idea of how much you might need to save into your pension. -
Financial wellbeing during the cost-of-living crisis
The high cost of essentials like energy, food and petrol means that many household are still feeling the pinch and looking for ways to balance their budgets. Here are some tips and resources to help reduce costs during this difficult time.