How could getting divorced affect my pension and retirement income?
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 basic State Pension can’t be split at divorce or dissolution, but the Additional State Pension (SERPS and/or the State Second Pension) can be shared.
The pension(s) may have been split (or shared) at the time of divorce or dissolution, part of the pension(s) may 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
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 may be able to retire on. Use our Pension calculator to estimate your retirement income.
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. Use our Pension calculator to estimate your retirement income.
If you are unlikely to have enough money to retire on, work out whether you can save any more.
Read more in our guide Build up your retirement savings after divorce or dissolution.
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 are 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
Although it’s possible to divide your Additional State Pension (SERPS and/or the State Second Pension) when you get divorced or dissolve your civil partnership, it is not possible to divide the basic State Pension. However, you may be able to claim a basic State Pension using your ex-partner’s National Insurance contributions record.
The rules say:
If you are divorced or have dissolved your civil partnership, you can claim a State Pension using your ex-partner’s National Insurance record for the years you were married or in a civil partnership.
You lose your entitlement to this pension if you remarry or enter into a civil partnership before you reach State Pension age.
If you have a shortfall in your State Pension, it may be possible to pay voluntary National Insurance contributions, in some circumstances. You can find out more about how to pay voluntary National Insurance on the GOV.UK website.
Divorce or dissolution and the new State Pension
If you are due to reach State Pension age after 5 April 2016, you will not be able to receive a State Pension based on your ex-partner’s National Insurance record for the years that you’re married or in a civil partnership. The only exception is if you paid the reduced rate of National Insurance at any time in the last 35 years.
You can read more in The new State Pension - rules and changes explained.