What happens to your pensions when you get divorced?

Pensions are important valuable financial assets within a marriage and determine future retirement plans. Therefore, it is crucial that they are taken into consideration from the outset of the divorce process.

Do divorcing couples have to share pensions?

During a marriage, it is often the case that one spouse will give up work or work part-time hours to care for children or elderly parents, putting their pension contributions on hold. As a result of this, one spouse may have a larger pension than the other, if one at all.

It would be extremely unfair if there were no provisions available to the spouse who has remained at home to take care of the family or the marital home. Therefore, in the interests of fairness, the courts can make provision for a pension to be shared upon divorce. This is known as pension sharing.

It is important for a couple to be aware of their legal rights, entitlements, and obligations if they are going through divorce proceedings.

What is a pension sharing order?

A pension sharing order is an order made by the court providing for a proportion of one person’s pension to be transferred to their spouse, allowing the claiming party to acquire a share of the accrued ‘pension pot’.

Pension sharing is rarely as straight forward as a 50/50 split and there are complex calculations involved to ensure that they are shared fairly between spouses. The share entitlement of the pension (the pension credit) will be expressed as a percentage, which can then be used to establish the pension provision for the receiving spouse, separate and independent of the other spouse.

Due to the complexity of establishing the final pension credit, instructing a solicitor to help you understand the process of pension sharing and your rights is invaluable. It is also advisable to instruct a pension expert to prepare an actuarial report to recommend how pensions can best be shared fairly.

There are various factors which must be considered, including the gender and age of the parties, the age gap, the length of the marriage, whether there have been periods of cohabitation, and how close either party is to retirement age.

One of the many benefits of a pension sharing order is that it allows divorcing couples to better plan for their retirement. This is even more important if either one or both spouses are close to retirement age and therefore unable to significantly increase their pension provision.

Another important benefit of a pension sharing order is that it is not affected should either spouse remarry in the future, unlike some other available court orders, which has seen them become increasingly common with divorcing couples, especially since the auto-enrolment scheme.

Please note that this information is for general guidance only and should not substitute professional legal advice. If you have specific concerns, we recommend consulting one of our legal experts.