When a relationship ends
Things to think about when your relationship
comes to an end.
Contacting us
About The Pensions Advisory Service
Pensions can change people’s lives. Most of us would like to be
able to choose to stop work one day and choose how we live
when we do. A good pension is a good way to achieve that. Our
vision is a future where people are empowered to make the most
of their pensions.
There are lots of ways you can contact us.
Pensions Helpline
0300 123 1047
(Monday- Friday 9:00am- 5:00pm)
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The Pensions Advisory Service (TPAS) is here to give people
professional, independent and impartial help with their pensions –
for free.
www.pensionsadvisoryservice.org.uk
Online enquiry form
www.pensionsadvisoryservice.org.uk/online-enquiry
Write to us
We are here to:


give you independent information and guidance on pension
matters
mediate and resolve problems you may have with your
pension
The Pensions Advisory Service
11 Belgrave Road
London
SW1V 1RB
@TPASnews
We will always try our hardest to help you with your pension query.
Our service is about you and your needs. We will talk to you about
the things that are important to you, helping you to navigate through
all the options that may be relevant to your personal circumstances.
At the Pensions Advisory Service, we understand pensions, and are
passionate about making them accessible to you. We’ will always
listen and offer you different ways to use our service.
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information only. The Pensions Advisory Service cannot be held responsible in law for any
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What to do if things go wrong
Unfortunately, even in the best run pension plans, sometimes
mistakes are made or matters take longer than they should.
For example, the share agreed between you and your partner is not
acted on correctly or a transfer takes too long and you lose money as
a result. If you are concerned that a mistake or a delay has worsened
the value of your pension you should contact the pension provider
straightaway.
Introduction
When a relationship ends, it’s hard. There are a lot of things to think
about and for many pensions are the last thing on their mind.
For a number of years, it has been a requirement for pensions to
be included in a divorce financial settlement but we often find that
many people do not realise this and this can have serious
implications on their income in later life.
This booklet looks at the issues you should consider, when a
relationship that you’re in comes to an end in respect of your
pension benefits.
If you remain unhappy with their response, speak to us. Our dispute
resolution service is free and impartial, and largely provided by expert
volunteers drawn from the pension industry. If matters have gone
wrong we will work with you and the pension provider to put things
right.
―temporary separation, divorce and
dissolution, can all have serious
implications on your future pension
benefits‖
―don’t suffer in
silence— we can help‖
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Overseas divorce or ending a civil partnership abroad
Where a couple are divorcing or ending their civil partnership
overseas and want to include any UK pension benefits in their
financial settlement, the ex-spouse or ex-civil partner would, following
an overseas divorce or overseas civil partnership dissolution, need to
make an application for financial relief in a UK Court. The court can
include an earmarking order or pension sharing order that would take
your pension rights into account. In these circumstances, we would
also recommend that you seek advice from legal experts.
Pension benefits not taken into account during financial
settlement
In certain instances, people who are already divorced or been in a
civil partnership did not take any pension benefits into account during
the financial settlement stage. The reasons for this range from; the
deliberate withholding of pension benefit information by their former
partner to, both parties being totally unaware at the time of divorce or
civil partnership dissolution, that pension benefits should be taken into
account during the financial settlement stage. In these circumstances,
it is necessary to seek specialist independent legal advice to see if
anything could be done to amend the position.
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Separation
If you’re unmarried and separating
Things to consider

Review what pension benefits you may already have - will
they be sufficient for your needs in retirement?

Does your employer offer a workplace pension scheme you
can join? If so, you should consider doing this.

If you are able to join an employers workplace pension
scheme, either because your employer does not offer a
scheme at present or because you are self-employed, you
may want to consider paying into your own pension
arrangement.


Consider getting a State Pension Statement to see how
much State Pension you are likely to receive, when your
State Pension age is and whether you have any gaps in your
National Insurance Contribution record. You can either
telephone the Pension Service on 0845 300 0168 and ask
for a Statement or go to www.gov.uk/state-pensionstatement where you can get a Statement online.
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If you’re unmarried and have separated, the Law says you aren’t
entitled to a share of your former partners pension entitlement when
he or she reaches retirement.
Your former partner could have a pension arrangement which
provides a death benefit. There are two types of death benefits; a
lump sum death benefit and/or a pension.
If your former partner is in an occupational pension scheme that
provides death benefits, the scheme rules will state whether there is
any provision for unmarried partners. The benefits may be a lump
sum and/or a pension. More often than not, where the death benefit is
a pension, it is only paid to a widow/widower or surviving civil partner
or possibly a financial dependent. If you’re financially dependant on
your former partner, you may be eligible. The rules on who receives
any lump sum death benefit may be definitive, or it may be left to the
discretion of the Trustees of the scheme.
Where the death benefits are the value of the pension pot, typically a
personal pension or stakeholder plan, the pension provider normally
decides who should receive any lump sum. There is no guarantee
that you would receive any payment. Your former partner may have
completed a Nomination of Wishes form that states who he or she
wishes the benefits to be paid. Even if you are nominated, the
pension provider may not pay it out to you, but will look at the
circumstances of your relationship. This would apply even if you had
not separated.
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Things to consider

Review what pension benefits you may already have - will
they be sufficient for your needs in retirement?

Does your employer offer a workplace pension scheme you
can join? If so, you should consider doing this.

If you are able to join an employers workplace pension
scheme, either because your employer does not offer a
scheme at present or because you are self-employed, you
may want to consider paying into your own pension
arrangement.

Consider getting a State Pension Statement to see how
much State Pension you are likely to receive, when your
State Pension age is and whether you have any gaps in your
National Insurance Contribution record. You can either
telephone the Pension Service on 0845 300 0168 and ask
for a Statement or go to www.gov.uk/state-pensionstatement where you can get a Statement online.
The pension awarded to the ex-spouse or ex-civil partner is called a
“pension credit‟. If the ex-spouse or ex-civil partner can keep the
benefit in the former spouse or former partners pension scheme, he or
she becomes what is known as a “pension credit‟ member. The
pension scheme may give the option or require the ex-spouse or excivil partner to transfer the benefits to another pension arrangement of
his or her choosing.
If you have a pensions share of a public sector pension you may not
have the option of a transfer of benefits. You will need to check with
the pension scheme to find out if you can transfer your benefits.
For a member that has shared a pension benefit with an ex-spouse or
ex-civil partner, the value of the pension credit awarded reduces his or
her pension entitlement. This is known as a “pension debit‟. If you’re
thinking about pension sharing and want to talk to someone about
how this might relate to you and your pension plans give us a call on
0300 123 1047.
Case study
― we recommend you review
your situation – especially if you
rely on some or all of your
partner’s pension ‖
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David and Sarah are divorcing and they live in Colchester. David has
a pension worth £20,000 per annum.
If the Court awarded that Sarah should have a pension credit of 60%
of the pension, David would only receive 40% of the full pension
entitlement.
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3.
Pension sharing (Splitting)
Pension sharing (also known as pension splitting), offers a clean
break settlement, where each party has independent pension benefits
in their own right. Pension sharing involves getting the value of the
pension benefits (usually the cash equivalent transfer value) of the
pension benefits as at the date of divorce or the civil partnership
dissolution date (or as at the date of petition or when the couple
separated, if earlier, in Scotland). In Scotland, the Court usually only
take into account benefits earned during the marriage or civil
partnership, whereas, in the rest of the UK, all the benefits are usually
taken into account, even those earned prior to the marriage or civil
partnership.
The amount to be awarded may be decided by the Court or between
the couple as part of the legal process. The pension scheme or
pension provider can only act on a court order or a court order/
registered Minutes of Agreement, in Scotland. If benefits are shared,
there is no set percentage and percentages can be awarded, between
1% and 100%. In Scotland, a fixed monetary amount can be awarded
in place of a percentage.
Unlike pension earmarking, the additional State Pension, such as the
State Earnings Related Pension Scheme (SERPS) and the State
Second Pension (S2P), can be shared. Pension sharing involves
getting a lump sum valuation of the additional State Pension benefit
from the Pension Service. For further information on sharing the
additional State Pension, we suggest you contact the Pension Service
on 0845 606 0265. The Government propose to introduce a new State
Pension system from 6 April 2016 where the new rules will not allow
pension sharing of any additional State Pension, except in certain
limited cases.
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If you are married or in a civil partnership and are
separating
If you’re married or in a civil partnership and you separate, the Law
says you’re not entitled to a share of your former partners pension
entitlement. Any entitlement to your former partners pension can only
be applied on divorce or civil partnership dissolution.
Your former partner could have a pension arrangement which
provides a death benefit. There are two types of death benefits; a
lump sum death benefit and/or a pension.
If your former partner is in an occupational pension scheme that
provides death benefits, the scheme rules will state whether there is
any provision for the spouse or civil partner. The benefits may be a
lump sum and/or a pension. More often than not, where the death
benefit is a pension, it is paid to a widow/widower/civil partner or
possibly a financial dependent. The rules on who receives any lump
sum death benefit may be definitive or it may be left to the discretion
of the trustees of the scheme.
Where the death benefits are the value of the pension pot, typically a
personal pension or stakeholder plan, the pension provider normally
decides who should receive any lump sum, so there is no guarantee
that you would receive any payment. Your former partner may have
completed a Nomination of Wishes form that states who he or she
wishes the benefits to be paid. Even if you are nominated, the pension
provider may not pay it out to you but will look at the circumstances of
your relationship. This would apply even if you had not separated.
If you’re married or in a civil partnership and you’re legally separated
(i.e. a decree of judicial separation in England, Wales and Northern
Ireland), the Court can make an earmarking order against your formal
partners benefits.
Earmarking is covered further ahead in this booklet.
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―we can help you review
your situation and explain
all the options‖
Case
study
Martin and Julie are divorcing . Martin has a pension worth £20,000
per annum all of which is taxed at 20%.
If the Court awarded each of them a settlement of 50% of the pension,
Martin would be required to pay 50% of his net pension income,
£9,000 per annum to Julie and he would retain the remaining £9,000.
Things to consider

Review what pension benefits you may already have - will
they be sufficient for your needs in retirement?

Does your employer offer a workplace pension scheme you
can join? If so, you should consider doing this.

If you are able to join an employers workplace pension
scheme, either because your employer does not offer a
scheme at present or because you are self-employed, you
may want to consider paying into your own pension
arrangement.

Consider getting a State Pension Statement to see how
much State Pension you are likely to receive, when your
State Pension age is and whether you have any gaps in your
National Insurance Contribution record. You can either
telephone the Pension Service on 0845 300 0168 and ask
for a Statement or go to www.gov.uk/state-pensionstatement where you can get a Statement online.
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Pension earmarking is less common these days with most people
preferring either pension offsetting or pension sharing so that there is
a clean break from the ex-spouse or ex-civil partner. The rules around
earmarking can be quite complex so, if this applies to you, please
contact our helpline and we can talk you through the things you may
need to be aware of.
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Divorce
2.
Pension Earmarking
Pension earmarking (or an attachment order as it is now known in
England, Wales and Northern Ireland) also involves getting the value
of the pension benefits (usually the cash equivalent transfer value) as
at the date of divorce or civil partnership dissolution date (or as at the
date of petition or when the couple separated, if earlier, in Scotland).
In Scotland, the Court usually only take into account benefits earned
during the marriage or civil partnership, whereas, in the rest of the UK,
all the benefits are usually taken into account, even those earned prior
to the marriage or civil partnership.
Earmarking is an agreement that when a benefit comes into payment,
a part (or all) of it is paid to the former spouse or civil partner. The
Court instructs the pension scheme or pension provider to make this
payment by way of a court order. The amount to be awarded may be
decided by the Court or between the couple. The pension scheme or
pension provider can only act on a court order. The percentage is paid
when the ex-spouse or ex-civil partner takes their benefits or when
they die with a lump sum death benefit. In England, Wales and
Northern Ireland, the payment can be taken from the pension and/or
tax-free lump sum. In Scotland, it can only come from the tax-free
lump sum.
Any pension in payment is taxed as the member’s income and
earmarked payments are paid to the ex-spouse or ex-civil partner
after tax. For this reason, pension providers are likely to require the
order to specify that the member (not the pension provider) is
responsible for the actual payments to the ex-spouse or the ex-civil
partner. The pension income stops on the death of the member
therefore, the shared income to the ex-spouse or ex-civil partner will
also stop.
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If you’re married or in a civil partnership and you decide to divorce or
dissolve your civil partnership, the Court is required to take any
pension rights into account. There are three different ways for dealing
with pensions on divorce or on civil partnership dissolutions
conducted through the Court. The decision on which option is chosen
will be either by agreement between the couple, or decided by the
Court. The three different options are - Pension Offsetting, Pension
Earmarking and Pension Sharing. Pension Earmarking is becoming
less common, so we provide a brief summary only. If earmarking
relates to you, please contact our helpline and we can give you more
information.
1.
Pension Offsetting
Pension offsetting normally involves getting the value of the pension
benefits (usually the cash equivalent transfer value) as at the date of
divorce or the civil partnership dissolution date (or the date of petition
or when the divorcing couple or civil partners separated, if earlier, in
Scotland). In Scotland, the Court usually only take into account
benefits earned during the marriage or civil partnership, whereas, in
the rest of the UK, all the benefits are usually taken into account,
even those earned prior to the marriage or civil partnership.
This value would then be included in the total value of the matrimonial
or civil partnership estate, to be divided on divorce or civil partnership
dissolution. The pension benefits are offset against other assets.
Case study
Brian and Susan are divorcing. Brian has a Personal Pension worth
£200,000 and the family home is worth £300,000. There are no other
assets of the marriage. Therefore the total assets are worth £500,000.
If the Court awarded each of them a settlement of 50% of the
matrimonial estate, Susan would get £250,000 of the equity in the
home and Brian would keep his pension and get £50,000 of the
equity in the home.
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