How could getting divorced affect my pension and retirement income?

Money Advice Service

If you’ve divorced or dissolved your civil partnership, or if you’re in the process of doing so, you may find you have less to retire on than you expected. Find out how to increase your pension as you approach retirement and how separating after you’ve retired may affect you.

If you’re already divorced or your civil partnership has dissolved

When you divorced or dissolved your civil partnership, any workplace or private pensions that you or your partner (husband, wife or civil partner) had should have been taken into account when dividing the assets.

In Scotland, only the pension that was built up during marriage or the civil partnership is taken into account.

The pre-April 2016 basic State Pension could not be split at divorce or dissolution, but the Additional State Pension (SERPS and/or the State Second Pension) which employees could build up under the old system can be shared.

Benefits built up for the new State Pension which applies from 6 April 2016 can’t be shared, although any ‘protected payment’ carried forward from benefits you have built up under the old Additional State Pension can be shared.

The pension(s) might have been split (or shared) at the time of divorce or dissolution, part of the pension(s) might have been ring-fenced to be paid out for one partner at retirement or its/their value could have been offset against the value of other assets, such as the family home.

You can find out about your options for splitting pensions in our guide Dividing pensions on divorce or dissolution.

Reviewing your pensions before you retire

Use our Pension calculator to estimate your retirement income.

If the pension(s) were shared when you got divorced or dissolved your civil partnership, check how much your pension(s) are worth now and work out how much you might be able to retire on.

If the pension(s) weren’t shared because you were awarded a larger share of the house or other assets instead, you should work out how much any pension savings you’ve built up separately are worth.

If you are unlikely to have enough money to retire on, work out whether you can save any more.

Divorce or dissolution after you retire

If you’re getting divorced or dissolving your civil partnership or you’re contemplating this after you’ve retired, any pensions that you and your ex-partner have will be treated slightly differently than if you separate before you retire.

With the changes to accessing your pension pot introduced in April 2015, it’s best to seek financial advice as this is a very complicated area.

You can find FCA registered financial advisers who specialise in retirement planning in our Retirement adviser directory.

If you’re considering getting divorced or dissolving your civil partnership, it’s a good idea to take advice from a solicitor (and sometimes a financial adviser or actuary as well) to make sure the pension is valued and divided correctly.

You can find out more about what professional help is available if you’re getting divorced or dissolving your civil partnership in Your options for legal or financial advice on divorce or dissolution.

Your State Pension and divorce or dissolution

From April 2016 there is a new State Pension which is based on your individual National Insurance record.

The new State Pension can’t be shared if your marriage or civil partnership ends.

However, some people might have already built up an amount higher than the new State Pension (£168.60 a week for the 2019-20 tax year) because of entitlement to the Additional State Pension, which applied to some employees under the old system.

This is known as a ‘protected payment’ and a court could order that this payment is eligible for sharing.

You can read more in our guide on The new State Pension – rules and changes explained.

This article is provided by the Money Advice Service.

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