What happens to my pension after a divorce?

Divorce is an emotional time for all concerned. In order to avoid unsuitable outcomes it is crucial to obtain pension support, guidance and advice from a financial adviser alongside any legal counsel. This will give you the best possible insight into exactly what will happen to your pension after divorce.

Did you know that your pension should be included in your financial settlement if you divorce or dissolve your civil partnership? Additionally, even when you agree on a settlement, any agreement on “sharing” pension arrangements will need to be confirmed through a court order.

Q:  How are private pensions valued / what is a fair ‘share’ and should the valuation be based upon income or capital value?

A: These are some of the most important questions for people and their pensions during their divorce.

When a marriage or civil partnership ends, courts usually deal with the pension arrangements in one of three ways:

  • You give away, or are given, a percentage share of a pension arrangement.
    This is known as a pension sharing order.
  • The value of a pension is offset against the value of other assets.
    This is known as pension offsetting.
  • You allocate, or are allocated, an amount of pension income and/or lump sum.
    This is known as pension attachment or sometimes pension earmarking. You can read more about pension sharing, offsetting and earmarking online here

Q: Would my state pension be affected?

A: The affects on your state pension after a divorce will depend on which state pension you receive (or will receive). Your basic state pension can’t be shared if your marriage or civil partnership ends. However, divorced couples may be able to use their former spouse or civil partner’s National Insurance contributions to increase their basic state pension. This won’t reduce the amount of state pension the other person receives.*

 

Q: How is this achieved?

A: If you have an additional state pension, the court could order that this is shared if your marriage or civil partnership ends.

 

Q:  What happens to these rights if you decide to remarry or enter into another civil partnership?

A:  Your new state pension can’t be shared if your marriage or civil partnership ends. For more details on these kinds of pensions, go to www.gov.uk/new-state-pension

It is crucial to obtain expert advice and guidance when valuing pension rights during divorce proceedings to make sure you understand what happens to your pension after a divorce. Sound advice also ensures the most accurate and beneficial outcome is achieved for both parties.

At True Bearing Chartered Financial Planners, we pride ourselves on the professional service we deliver to both clients and their legal advisers. To learn more about how we can help you, please Contact Us on 01257 260011.

*Source – Pensionwise