Pensions and divorce: what to consider

Aug 26, 2020
The breakdown of a marriage can be a very difficult time and while the impact on your pension might not be at the forefront of your mind, it is extremely important to know what to expect in order to be able to make the best decisions for yourself.

According to the latest ONS statistics on divorces in England and Wales, 42% of marriages now end up in divorce, making it even more important for men and women to protect themselves financially.

If you are living with your partner but are not married or in a civil partnership, they will not be entitled to any of your pension benefits if you separate.

However, your pension is one of many assets that will be taken into account when working out a financial settlement if you get divorced or there is a dissolution of your civil partnership.

The Court can award part or all of your pension to your ex-spouse either by a Pension Attachment Order or a Pension Sharing Order.

Pension Attachment Order

  • Allocates an amount of your pension when it is put into payment (specified by the Court) to your ex-spouse
  • The amount will be held in the Scheme and paid when you take your Scheme benefits
  • The amount could also include a portion of your lump-sum death benefit and/or your retirement lump sum
  • Your ex-spouse would no longer be entitled their share of the benefits if you die or (in most cases) if they remarried
  • If your ex-spouse dies before you, your pension would revert to its full amount.

Pension Sharing Order

  • Allocates a one-off payment (specified by the Court) from your pension benefits to your ex-spouse as part of your divorce settlement
  • Once the payment has been made, your benefits are reduced by the same proportion and your ex-spouse will have no further claim to your pension
  • The amount allocated to your ex-spouse (known as a ‘pension credit’) can be used to buy pension benefits for your ex-spouse, either in the Railways Pension Scheme or another pension provider
  • These pension benefits are completely separate to yours, so your ex-spouse does not have to take their benefits at the same time you do. They could also continue to be paid after your death or if your ex-spouse remarried
  • If your ex-spouse dies before you, your pension would not revert to its full amount.

The Court will require details of your pension benefits and some of the information you may need is:

  • A CETV (Cash Equivalent Transfer Value)
  • The amount of lump sum death benefit
  • Details of any dependant’s pension
  • Your period of membership

We can only provide information on your Scheme membership to you, your solicitor and the Court.

You can learn more about the options, process and charges in the Guide to divorce and your pension’.