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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Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

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