Splitting a Pension in Divorce

Pensions can be complex, and it is always advised that any divorcing couple speak openly and honestly about their pension savings to a family solicitor.

Our team can discuss all the options available, your rights and how pensions may be shared upon divorce

Initial Discussion

For an initial free discussion and a no-obligation quote, get in touch with us today by simply calling us on 01234 343134 or email us at enquiries@fullersfamilylaw.com and a member of our team will get back to you.

What happens to a pension on divorce?

Pensions are an asset that should be divided between you and your spouse or partner during the end of your marriage or civil partnership. However, this may not happen if you both have a similar amount invested in pension funds.

If one partner has stayed at home with children, whilst the other has built up a considerable fund then it is recommended that you seek legal advice to ensure that the asset is split fairly between you.

There are several different approaches to tackle pensions in divorce settlements depending on the circumstances of the couple concerned.

Pension Sharing

One of the most popular options to split pensions on divorce is by pension sharing. This is when an agreed percentage of one spouse’s pension is transferred to the other through a pension fund.

The benefit of this option is to provide couples with a clean break, enabling them to build their pensions independently.

By sharing your formers partner’s pension, you may also be entitled to the benefits of their scheme, however, a pension sharing order can only be completed once the divorce has been finalised.

Your pension sharing will be unaffected by whether your former partner dies or retires and the order is not affected by you remarrying.

Pension Offsetting

Pension offsetting is when one party’s pension can be traded for capital, such as property or the family home.

This can be difficult due to the complexities involved in trying to compare the values of assets and to work successfully, pension offsetting needs to be considered fair to both parties.

Pension offsetting can be challenging and it is always recommended to seek legal advice to ensure that both parties are fully aware of what they may be losing, retaining or acquiring.

Pension Earmarking

Pension earmarking is a less commonly used approach to split pensions, as it means that the spouses will be tied to one another for a long time after their divorce.

This option works by one spouse giving the other an interest in their pensions, but the benefits will only occur once the party has drawn their pension.

Another disadvantage is that the non-scheme holder will have no control over the contributions made towards the pension, how it is invested or when they can receive the benefits.

Additionally, if the pension-holder dies, the pension benefit will be lost. There are other considerations here which should be discussed with an expert family solicitor.