What happens to my UK pension if I get divorced?

Within this blog, we will explore some of the things you should be aware of concerning what happens to your UK pension if you get divorced.

If you and your spouse are going through a divorce, you are likely to have a number of questions regarding how your assets are divided. People living outside of the United Kingdom and being members of pensions held in the United Kingdom commonly ask the following questions:

  • Can I keep my pension in a divorce?
  • Will divorce affect my pension?
  • What percentage of my pension goes if I divorce?

The answers people seek on the above are often dependent on individual circumstances. However, there are certain commonalities that people should be aware of.

A UK Court will not necessarily enforce the orders made by foreign courts for British pensions. Because of this, if you are going through an international divorce, you need to ensure you seek advice from a lawyer who specialises in international family law. Failure to do so could lead to complications if you attempt to enforce a legal settlement made in a foreign jurisdiction (outside the UK).

When a divorce occurs, the two parties can reach an agreement outside of court, where the assets are divided. Avoiding taking the divorce to court can produce a more amicable agreement between both parties. However, this is not always the case. In many cases where an out of court agreement is not made, the assets are divided inside a British Court. When this is the case, a British Court will generally use one of three options when a divorce takes place regarding how a pension is treated.

A pension sharing order 

A pension sharing order sets out what percentage of the pension(s) in question will be given to you and your ex-spouse. This option can be advantageous as it allows the asset to be split and allows both parties to maintain ownership of their segment. Once this is agreed upon within court and recorded by solicitors, it becomes legally binding.

Offsetting 

Pension offsetting involves your and your spouse’s pension(s) being treated as a single asset and not broken apart (as is the case in the example above). In this scenario, the pension will remain fully in the ownership of the member and the party who does not receive the pension will be allocated other assets for example, a property of similar in value, to ensure both parties receive a fair amount of wealth from the divorce.

Earmarking / Pension attachment 

This option is becoming increasingly uncommon. However, it is still worth mentioning as on occasions it happens. A pension attachment or earmarking order will redirect a segment of the member’s pension to their ex-spouse at the point at which it is paid. Whilst on the surface, this option appears reasonable, it can leave one party in a vulnerable position. This is because they will only receive payment at the time when the member decides to take benefit from the scheme. Should the member have sufficient other assets in place, they may choose not to draw from the pension, meaning their ex-spouse will not receive anything.

Understanding these options is key for both parties to reach a divorce settlement that benefits both sides equally. 

Should you wish to speak with a deVere advisor about any of the information provided above or a different topic related to UK pensions, please click here

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