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Sorting out your finances when you get divorced
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This guide explains:
It doesn’t matter whether you are trying to negotiate between yourselves, taking part in mediation, or preparing for court - you need to understand pensions and how important they are in the bigger picture of sorting out your divorce.
This guide is for you if:
This guide is not for you if you are separating from a partner but you are not married or in a civil partnership with them. This is because the law for couples who live together without being married or in a civil partnership is completely different. You can find more information about this in A survival guide to living together and breaking up.
Depending on where you are in your separation, it might be helpful to read this guide through from the start to How the court deals with pensions when you divorce. Then after that, it may help to read each stage as you reach it.
There is no need to rush through the guide - you can take it in chunks, at your own pace. You may find it really helpful to read this guide alongside A survival guide to sorting out your finances when you get divorced as this will help you understand more about all the finances in your case.
It was extremely stressful to start with. I wanted to get everything sorted straightaway and couldn’t bear the uncertainty of where I would live or how things would work. It all got a bit easier when I accepted that it would take several months before I would know what would happen with my pension and if ring fencing would apply in my case to protect my pension. Eventually I understood that everything can be shared, including my pension, if that is what the court says is fair
This is just one of our resources to help you work out your finances when you get divorced or end a civil partnership. These will also help:
This guide does not cover:
If any of these situations apply to you it is very important to get professional advice before you make any decisions about the future. Depending on your situation you may need a specialist family lawyer, or a financial adviser who specialises in pensions, or both. For information about where to find advice, take a look at the section called More help and advice.
When you see the word ‘ex’ in this guide we use it to mean your husband, wife or civil partner you are separating, or separated, from. Most of the law is the same whether you are ending a marriage or civil partnership. Where there is a difference, we'll make it clear. We talk about divorce through this guide but all the rules apply to people who are ending their civil partnership too.
We try to explain any legal or technical language as we go along, but there is also a What does it mean? section at the end to help you.
The information in this guide applies to England and Wales only.
We are updating this guide and would love your feedback on how to make the new version better. When you have read the guide please do let us know what you think by doing our 5 minute survey.
When people divorce it is natural to focus on the immediate problems - where you and any children are going to live, and what you are going to live on. Pensions can get forgotten. They can seem complicated, scary or just dull. They may seem too far off in the future to worry about now, when there are so many other things to think about. Here we explain why it is really important to think about pensions when you divorce. We also explain some other useful things to understand from the start.
While there are a lot of things to think about when sorting out finances with your ex, the three key things to focus on are:
The sooner you (and your ex) start to look at pensions, and get any help you need, the better: if you leave it until the end, it will cause delay.
Any agreement you reach on your finances with your ex, including about pensions, will need to be approved by the court for it to be legally binding on you both.
'Is it true that my ex can claim against my pension fund? Can I claim against theirs?'
'Yes. A pension is just like any other thing of value or asset in the marriage and a judge has specific powers to share pensions (the law calls this ’pension sharing’). Or the judge can order that some or all of the benefits paid from a pension are paid to the person who doesn’t have a pension (the law calls this ‘pension attachment’).'
I paid money into a joint account with my husband for years. Money from that account was used for his pension. When we divorced it was seen as very much ‘his’ pension. He persuaded me it was nothing to do with me. We didn’t use solicitors and I had no idea I could actually get a share of it. Now I am retired I have very little to live off. I lost everything I paid in. I wish I had faced it all properly at the time.
‘I built up my pension for ages before I got married. Surely that is mine to keep?’
‘Just because you acquired some or even all of your pension pot before you got married it doesn’t mean it can’t be shared on divorce, if that is the fairest way to deal with the case. If one person’s needs require it, the court can look at any of the things of value, called ‘assets’, to come to a fair outcome.’
I very much had it in my head that my husband needed his pension and that I could manage ok on mine. He had given me a bit of an idea of what his was worth over the years but he always dealt with the money side of things, so I didn’t really have a proper idea of the up to date value.
And as I say, I was going to leave the pensions - I hadn’t really thought about it properly if I am truly honest. If it hadn’t been for my son nagging me I would have just left it I think. Anyway, my son really wanted me to find out what the pensions were worth when we were divorcing. My husband wouldn’t give me or my son the details. He said it was his pension and what was I making such a fuss about when I had my own. I was worried about making him cross but my son said I needed to look into it properly before I could know what I should do.
In the end a judge had to order my husband to show what his pensions were worth. Turns out he had one really good pension. It was worth a lot more than mine and he had kept quiet about how much it was worth. I was glad then, even though it had felt very hard confronting him about it. I would have lost out myself, thinking I was being kind to him. Without my son and the judge helping me, I wouldn’t have the best decision. Now I am not too badly off but I would have really struggled if I hadn’t got that court order. I see now that I didn’t realise what was at stake. Really, he just wanted to fob me off till it was too late for me to do anything. Thank goodness I did something about it in time!
I had no idea that my wife or I could claim against the other one’s pension when we got divorced. I wish I had - now I am struggling for money.
This section focusses on the different types of pensions you may have, to help you get a better understanding of them, before we move on to talk about the law on pensions and divorce.
To be honest, I don’t really know what all the different pensions are - there are so many names and some much jargon - it confuses me. I just feel embarrassed and then I give up trying to understand!
Put simply, a pension scheme is like a long-term savings account that helps you save money now for when you are older. When you want or need to retire, the pension gives you money to live off.
To start with, there are two types of pensions:
As the State Pension only usually provides a basic level of income, the government wants to encourage people to pay into a private pension too. To encourage this type of saving for the future there are tax benefits to paying into these pensions.
When you reach the age when you can claim your pension, there are often different options open to you about how to receive your money. You may be able to get a lump sum of money paid to you without paying tax on it. This is usually called a ‘tax-free lump sum’. You may also get a regular payment from your pension into your bank account to live off which will usually be taxed. This can be directly from your pension fund or from an insurance company that pays you an annuity. This is where the insurance company guarantees to pay you a regular amount of income.
You can have more than one private pension and many people do, as they move from different jobs through their working life. There are lots of different types of pensions and one person may have more than one type. We talk about the different types of pensions you may come across next.
I feel so embarrassed not understanding the options or what to do next. It is so hard to know where to start or who to turn to.
The State provides a pension so that people have a minimum standard of living when they stop working.
You can only get the State Pension when you reach what is known as State Pension age. Your State Pension age is linked to your date of birth and set by the government. It is quick and easy to check what your State Pension age is by looking at the state pension age calculator on the gov.uk website.
To get the State Pension you need to have a certain number of years where you have either paid National Insurance contributions or received certain benefits that give you credit in the system. You can find out more by going to the basic State Pension eligibility section on the gov.uk website.
The 6th April 2016 was a very important date in the world of state pensions. On this date a new State pension system was introduced in the UK. This means, depending on how old you were on that date, you are either in the old system or the new one. There are two different state pensions:
First check your State Pension age and then take a look at the table below to see which pension system you are in.
If you reached State Pension age before 6th April 2016
If you reached or will reach State Pension age on or after 6th April 2016
You will get
Old State Pension made up of:
You will get
New State Pension
(which may have a protected payment included depending on how much Additional State Pension you had before 6th April 2016)
How much you receive when you reach State Pension age is linked to what National Insurance contributions you have made in the past. For more information about this take a look at The state pension - what you might get on the Pensions Advisory Service website.
You can check your National Insurance record to see if there are any gaps in your contributions or credits. If you do have any gaps you may be allowed to fill some of them by paying extra contributions. If you can afford to fill in any gaps this is likely to be money well spent when you reach State Pension age. Generally, the cost of filling any gaps will be repaid after you have received the State Pension for around three years and you are likely to live a lot longer than that.
There are many different types of private pensions. Private pensions are not funded by the State. Instead they are occupational or workplace pensions set up by your employer or they are pensions that you set up yourself.
While there are many different types of private pensions out there that are set up and managed in different ways, they generally fall into two types - Defined Contribution and Defined Benefit pensions. This difference is important when it comes to valuing pensions, which you need to do in the divorce process. We talk about these two different types of pensions next, starting with Defined Contribution pensions.
These are the most common types of private pension. They are also called money purchase schemes. The pension pot is ‘defined’ by the contributions you make to it. Its value is based on how much is paid in, how long it has been invested for and how well the investments perform. What you get when you retire is not set in advance.
You build up your own pension pot by paying in money (usually each month) and that money is invested by the pension provider. You can have this type of pension without having an employer - for example if you don’t work or are self-employed.
If you have an employer, usually the employer must add you to their workplace pension scheme. You might hear this type of pension being called an ‘occupational’ or ‘company’ pension. The process of being added to your employers’ pension scheme is known as ‘automatic enrolment’. You can find useful information about this on the Workplace pensions pages of the gov.uk website.
Whatever type of Defined Contribution pension you have, there is no guarantee how much you will get when you come to retire. It depends on:
As there are a range of different types of pensions that come under this category it is important to understand the particular features of your pension or pensions.
Next we describe some of the more common types of Defined Contribution pensions.
You have a contract between you and the pension provider. Your employer can also contribute to the pension but they don’t have to. You can pay into it if you are employed, self-employed or not working. This type of pension is designed to be accessible to many people and the government has made rules to limit the charges that can be imposed by the provider.
You have a contract between you and the pension provider. You can pay into it if you are working, self-employed or not working. If you are employed your employer can also contribute to the pension but they don’t have to. Personal pensions can give you more flexibility than Stakeholder pensions. For example, with a personal pension the rules are more flexible about when and how often you can take a tax free lump sum or income from your pension.
In this category there are also Self-Invested Personal Pensions, known as SIPPS. This type of pension comes with wider investment powers than the usual personal pensions. You can make decisions about where to invest the fund, across a wide range of assets. To read more about this type of pension start by searching for Personal pensions or SIPPs on the Pensions Advisory Service website.
Occupational money purchase schemes
These are pensions organised by your employer. Often they are run by external administrative schemes. Because of the way these pensions are run, you tend to have less say on the type of investments made, than with personal pensions.
A good place to find out more about your type of private pension is at the Pensions Advisory Service website, in their Pensions basics section. Take a look at any paperwork you have about your pensions. This paperwork can often make for tricky reading. If you find you can’t make sense of it, you can contact an expert at the Pensions Advisory Service for free, independent guidance.
You might not be able to find your pensions paperwork. Let’s face it - it doesn’t make for particularly interesting bedtime reading and can easily get stowed away at the back of a cupboard or lost in a house move. If you have a feeling you might have a pension pot through an old job but you just can’t find the paperwork you can look at the helpful information on the Money Advice Service website about how to trace lost pensions.
Defined Benefit pensions are workplace pensions, run by your employer. The pension pot is not ‘defined’ by what you pay in but by what benefits the pension promises to give you when you retire.
These pension plans are sometimes called ‘final salary’ or ‘salary-related’ pensions, but there are other types too, such as Career Average schemes. Some company pensions come under this type of pensions. All public sector workplace pensions are Defined Benefit pensions.
The value of a Defined Benefit pension is based on:
The accrual rate is usually written as a fraction of your pensionable pay. So for example, if the final salary accrual rate set by your employer is 1/60th, you will get 1/60th of your final salary as a pension for each year that you have worked.
The level of benefit you will get when you retire is set in advance, so the risk lies with your employer. If the pension fund has a shortfall your employer must make up the difference. That means, with this type of pension, you are protected from the ups and downs of the financial markets. If your employer gets into financial problems and cannot pay you your pension, the Pension Protection Fund may step in to pay your pension. But you might get less than you were promised by your employer.
Defined Benefit pensions often have other benefits. Some examples are:
Fewer and fewer employers provide this type of pension now because of the risks and costs involved for them to make sure you get the amount of pension benefit promised.
Public sector pensions
Public sector workplace pensions come under the category of Defined Benefit pensions. There are various public sector pension schemes with different rules. For example, pensions from work in the Armed Forces, the Civil Service, the NHS, Teaching, the Police and Firefighters and Local Government are all Defined Benefit pension schemes but the benefits from each type can vary. The age at which you can retire and start receiving a public sector pension varies depending on the type of pension you have and when you joined the pension scheme. It is a good idea to look into this if you or your ex have one of these pensions.
Public sector pensions have changed in recent years but the benefits that come with public sector pensions remain very generous compared to many Defined Contribution pensions.
I wish I’d had more info. I was in a civil partnership with a police officer who had a very good pension but it all went wrong for us 10 years ago. To other people now I’d say “make sure you concentrate on what your own pension will be - don’t just let the other person keep all their pension, without looking into it properly.
You may have heard about something called pension freedoms. Since 2015 people with Defined Contribution pensions now have more flexibility around how they can access their pension money and what they do with it once they reach the ‘minimum pension age’ which is currently age 55. If you have a Defined Benefit pension you can, in some situations, move your pension pot to a Defined Contribution pension scheme so you can access the pension with greater flexibility.
If one of you is nearing the age of 55 or is over 55 whilst you are going through this process it is very important to be aware of the options available due to these new pension freedoms. There are pros and cons on making use of pension freedoms that you should consider carefully and get advice on from a regulated financial adviser before making any big decisions.
Beware if your ex is the one with the option of taking their pension at 55 while you are going through the divorce process. There is a risk that they could withdraw their pension money before an order is made for the pension to be shared with you. If you might be in this situation it is important to speak to a specialist lawyer as soon as possible for advice. See More help and advice
There are some pensions that don’t fit quite so neatly into the two types we have been talking about. Next we explain a little about more unusual pensions that you may have. Some pensions get called ‘hybrid’ pensions as they are a kind of mix of Defined Contribution and Defined Benefit pensions.
Small Self-administered Schemes (SSAS)
These are small pension schemes often set up for senior or key staff members at small companies. The benefit of these schemes is that they are very flexible and you can do a lot more with them compared to more standard pensions. This can mean they get rather complicated to deal with during a divorce. For more information on these a good place to start is the Pensions Advisory Service section on SSAS.
A pension annuity is an annual payment at a set or ‘guaranteed’ income for a fixed period, say for 10 years, or for the rest of your life. When you retire, you can use some or all of your pension savings to buy an annuity, and a financial adviser can help you get the best deal on the open market. This gives you certainty in terms of your monthly income. Some older pensions have a benefit attached called a ‘Guaranteed Annuity Rate’. This usually gives you a much higher income than you could get now on the open market and so these guarantees can be very valuable.
Section 32. transfer plans
These are private pension plans that are set up to have a previous occupational pension transferred into them. The new scheme promises to give you all the benefits you would have had under the old pension. This can often include something called a Guaranteed Minimum Pension which can be really valuable.
Whether it is right to share out your pensions and how to share them will depend very much on the particular circumstances of your case. Pensions are just one part of the jigsaw when working out an agreement with your ex about your finances when you divorce.
To reach a fair agreement which sorts out your finances, including pensions, then you need to understand what the law says.
A judge has the power to share out all your income, property, pensions and savings (the law calls these things of value ‘assets’) in a way that meets the needs of your children (who are under 18) first, and then you and your ex.
The overall aim is to get a fair outcome for you and your ex. But be aware that to get to this, it doesn’t always mean that everything is shared out equally - 50/50. What someone might think of as fair when it comes to pensions may well be very different to how the law views it. For example, if you built up a decent pension before you married you might think it only fair that you keep that when you divorce. This is often called ‘ring fencing’ by lawyers. But, in most cases the court will take into account all the assets to meet the needs of the children (who are under 18), your ex and you, no matter when or how they were built up. It is common for the court to take this approach unless it was a very short marriage with no children or a big money case with millions of pounds of assets to sort out.
How the court deals with the finances in a case depends on all the circumstances, such as your different needs, health, differences in age and how long you have been married. If there are children (under 18), the law puts their needs first and then looks to what will give a fair outcome for the adults.
To understand more about what the law says on how finances should be dealt with on divorce take a look at A survival guide to sorting out your finances when you get divorced.
When it comes to pensions, there are three broad ways they can be dealt with on divorce. We will look at each of these next. Which of the three ways turns out to be the best for you will depend on the type and value of the pensions, the other assets and income you both have and what your needs are.
When you divorce, a judge has the power to make an order to share out your pension savings between you. This order is called a pension sharing order. A pension can only be shared if a court order on divorce has been made by a judge. A pension sharing order tells the providers of a pension fund to transfer a percentage of the transfer value (anything up to 100%) to whichever one of you is to benefit from the order. Any private pension (this includes occupational or workplace pensions) can be shared in this way and limited parts of the state pension can also be shared in this way (we talk more about this in the next section).
The pension share can sometimes stay with the same pension provider, but put into your name, but more often than not, it has to be transferred to a different scheme in your own name, which can be an existing pension or a new one that you choose. This means that you can then decide separately what you want to do with your pension pot in the future - it is your own pension. This is not then affected by your ex dying or you re-marrying in the future.
The name of this order might make you think that the income you get from the pensions will be divided equally between you and your ex but this may not the case. And even if the pension pot is shared out equally this doesn’t necessarily mean that the income you get when you retire will be the same as your ex’s. This is due to lots of different factors for example, any age difference between you and how the pension investment performs before you start receiving the pension payments. Also, if you are the one that benefits from a pension sharing order, it is important to understand that you will usually pay income tax on the money you get from the pension, after you have taken any tax free lump sum you are allowed to have. This means that the value of the money to be transferred as a result of a pension sharing order may not have the same value as money that might be kept by your ex in, say, a savings account.
Many couples work out an agreement that involves something called ‘offsetting’. This means you trade a right to receive a pension benefit now or in the future for an asset you can have now. For example, your ex might keep all of their pension fund, and as a trade-off you get more of a share, or all of the family home.
Offsetting can be done without a court order, or it can be part of an agreement that is approved by the court. It is not a good idea to do it without a court order though, because without a final order either one of you could still apply to court for a different order about finances in the future. It is also not a good idea to do it without expert advice - more on this later in the section called Stage 3 - working out if you need expert help.
Many couples who are divorcing choose offsetting to reach an agreement on finances. It is sometimes the only option available, if, for example, the main carer of the young children of the family wants to keep living in the family home and there are few other assets, other than the pension pot. But the approach isn’t as straightforward as it may seem and can lead to really unfair outcomes.
The problem with this approach is that the value of a pension fund (a right to get an income and/or capital in the future) is very hard to compare with a totally different type of asset such as the family home. So working out if the agreement is fair is really tricky. If you do decide to trade your right to a share of the pension pot for the family home you may think you are getting a good outcome but actually the pension pot can be worth a lot more than the family home, especially if the family home is bigger than you need at the end of the divorce. If the pension is worth a lot more than the family home, a fair outcome might be that the person who stays in the home also gets a share of the pension but a smaller share than 50%.
There are tax issues that make comparing the value of the family home and the pension pot tricky too. This is because a pension is mostly taxable when it is paid to you, while there is usually no tax to pay when you sell the family home. So, for example a Defined Contribution pension of £200,000 can be worth less in your hands compared to the family home that is sold for £200,000. Remember though, that Defined Benefit pensions are different - for a reminder of the difference take another look at the section called Pensions - the basics.
There are problems with this approach for both you and your ex too, when looking to the future. If you agree you will stay in the family home and, in exchange, agree not to make a claim on your ex’s pension, you can find yourself with little or no income when you are retired unless you can build a decent pension up after the divorce. If you are the one with the larger pension and agree for your ex to stay living in the family home you may not have enough capital to buy a new home for you and any children.
Another issue to be aware of is that the person keeping the pension will eventually receive it as income, and will usually pay some income tax on it. On the other hand the person staying in the home will not be taxed for owning the home.
If you find that this is an approach that you want or need to take, you may well to need expert advice on how to go about it so that you understand what rights you are potentially losing. We talk more about this in the section called Stage 3 - working out if you need expert help.
Another order that the judge can make is a pension attachment order. Under this order a percentage of your pension that you get, each week or month, is paid to your ex, or a percentage of theirs is paid to you. A percentage of any tax free lump sum you receive from your pension can also be paid to your ex, or the other way round. The same approach can be used when it comes to any death in service benefits too, so that if you die in service, a percentage of that benefit is paid to your ex, or a percentage of theirs is paid to you.
These orders have downsides though. The person receiving the benefit has to wait until the other person is receiving their pension. And it is really important to understand that, with this order, the pension payments end when the person who owns the pension dies or if the person receiving the pension payments re-marries. Also, either person can ask the court to change the order at a later date, so they give you less certainty. Because of these issues this type of order is very rarely made nowadays.
The best approach to take out of these three options of pension sharing, offsetting or pension attachment, will depend on the particular circumstances you and your ex find yourselves in. Most people will either end up with a pension sharing order or they will agree to use the offsetting approach.
To come to a fair outcome in the end there is a process to go through. We have broken this down into stages to make it clearer. You can use the table below to work out where you are in the process and then follow the steps at the right pace for you.
Finding out how much the pensions are worth
(your ex needs to do the same!)
Sharing your pension information with your ex
(your ex needs to do the same!)
Working out if you need expert help with any of the pensions in the case
Getting expert help on pensions
Working out your options when you know the value of the pensions
Reaching an agreement with your ex
If you reach an agreement -
Asking the court to approve your agreement - when this is done your divorce can be finalised and your financial agreement can be put into action
If you can’t reach an agreement -
Asking the court to help you come to an agreement or if this really isn’t possible - the court will make an order that you will both have to accept.
You need to keep checking your pension instead of just leaving it till you need it and then you suddenly see it’s worth nothing. If I’d reviewed as I was going along – well, I wouldn’t be where I am now - in a low place. You need a realistic idea of what you’re going to get.
Most of us do not have an accurate idea of how much our pension savings are worth. You need to find out the value of your State Pension and any private pension savings that you have. This includes occupational or workplace pensions and pensions you have set up yourself. Your ex needs to do the same. Don’t panic if you don’t know how to do this. You are not alone! This section will take you through what you (and your ex) need to do.
Try not to worry if your ex refuses to get evidence about their pensions and trying to mediate doesn’t work. If you need to, you can ask the court to order them to provide all their pension information to you and the judge. We talk more about what to do if your ex won’t communicate with you in Stage 2 - sharing your pension information with your ex. If you have really tried to agree things but haven’t managed it, you can look at Stage 7- the next steps when you have an agreement, or what to do if you can't agree. For more on applying to the court for a financial order when you divorce go to our guide How to apply for a financial order without the help of a lawyer.
If you reached state pension age before 6 April 2016 you will probably have rights to the basic State Pension, and you may also have rights to an Additional State Pension.
If you reached state pension age on or after 6th April 2016 you will probably have rights to the new State Pension, and you may also have rights to something called the Protected Payment. This is an extra pension payment because you had a very high amount of Additional State Pension before the changes to the State Pension system came in.
Use this table to work out which State Pension you will get and then see how to get a valuation or forecast. You need to get a valuation or forecast for each type of State Pension you are entitled to.
Date you reached, or will reach, State Pension age
What State Pension you get
How to get a valuation or forecast
you reached State Pension age before 6th April 2016
Old State Pension made up of:
Basic State Pension:
You will need your most recent statement from the Pension Service. These are sent out once a year in around February or March. If you can’t find your most recent statement you can ask for a new copy from the Pension Service.
Additional State Pension:
If you are not sure whether or not you are entitled to this fill in the form just to check:
You need to fill in Form BR20 (available on the gov.uk website - search ‘state pension valuation on divorce or dissolution’) and send it to the Pension Centre in Wolverhampton (full postal addresses are provided on the forms).
you reached State Pension age on or after 6th April 2016
New State Pension
(which may have a Protected Payment included depending on how much Additional State Pension you had before 6th April 2016)
New State Pension:
If you are getting this now - you can look at your annual statement to see how much you get each week.
If you have not yet reached State Pension age you need to fill in Form BR19 for a forecast (which you can find on the gov.uk website), and send it to the Pension Centre in Wolverhampton (full postal addresses are provided on the forms). There are also details on how to apply online or by phone on the gov.uk website - search ‘application for a state pension forecast’. It is likely to be quicker if you apply online.
If you are not sure you are entitled to the protected payment fill out the form just to check:
You need to fill in Form BR20 (available on the gov.uk website - search ‘state pension valuation on divorce or dissolution’) and send it to the Pension Centre in Wolverhampton (full postal addresses are provided on the forms).
Most state pensions cannot be shared between you and your ex when you divorce. But, it is still really important that both you and your ex get valuations or forecasts of all your state pension entitlements. This is because you will benefit from them in the future and so they can still be taken into account when looking at who needs what, when the divorce is finalised.
The state pensions that can be shared (with a court order) are:
The only ways that the Additional State Pension can be shared on divorce are:
The basic State Pension cannot be shared on divorce. But, if you are in the old State Pension system you might be able to do something to increase your payments. We explain what this is next. If you know you are in the new State Pension you can skip this bit.
You can apply for something called ‘substitution’ if:
You can apply to the Pensions Service to ask for your ex’s extra National Insurance contributions to be treated as though they were yours too. This is called ‘substitution’. The really good thing about this is it can increase your state pension payments but doesn’t change your ex’s at all. You may not know if your ex has a higher basic State Pension than you, but if your ex mainly worked through the marriage and if you had care responsibilities or did part time work, your ex is likely to have a higher basic State Pension.
To claim a substitution you need to write to the Pensions Service and ask for your basic State Pension to be increased and your National Insurance contribution record to be substituted with your ex’s record. You need to send:
Beware that your request may be rejected, by mistake. This is because this option isn’t well known about, even at the Department for Work and Pensions. If your request is rejected, send it back with a polite letter of complaint and ask for someone more senior to look into it.
You should apply as soon as possible and ideally within 3 months of your divorce, to make sure your claim is backdated to the date of your divorce. If you leave it a while before claiming it can normally only be backdated 3 months and so you could lose some money.
The starting point for valuing all private pensions for the purposes of divorce is something called the cash equivalent transfer value. This type of valuation has other names too - you may hear it called the cash equivalent value (CEV), the cash equivalent (CE) or the transfer value. We are going to call it the cash equivalent.
The cash equivalent is the amount of money which the managers of your pension would have to pay into a new pension if you wanted to move to a new pension provider. It is a way of valuing your pension rights. It is a way of measuring how much the pension pot is worth at the time you ask for the valuation, not what you will get as an income when you retire. Many things affect the amount of money you will get from a pension when you retire, including what income tax you may have to pay on it.
The cash equivalent is the starting point for valuing pensions for the purposes of divorce and the court must have the cash equivalent information for all the pensions in your case if you ask for a court order - whether the order is by agreement or not. But, the cash equivalent doesn’t tell you anything about what income you will get when you retire or what other benefits the pension may give you.
You are only entitled to get one cash equivalent valuation each year free of charge for each occupational pension you have. If the pension is being paid it is likely you will have to pay for a cash equivalent valuation. There could also be a charge if you are within 1 year of your pension scheme’s retirement date. For all other pensions, you don’t normally have to pay for a cash equivalent valuation.
Our top tips on getting your cash equivalent and pension benefit statement
When you get your cash equivalent valuations and your statement of benefits for your Defined Benefit pension, if you have one, you need to read it all carefully. The statement of benefits will set out what, if any, extra benefits come with your pension. These extra benefits can make your pension (or your ex’s) a lot more valuable. If you struggle to work out what it means, the best place to get help to start with is the Pensions Advisory Service. You can contact them in lots of different ways - depending on what suits you best. The statement of benefits document is not easy to understand and it is likely you will need expert help if you have a Defined Benefit pension. We talk more about this in Stage 3 - working out if you need expert help and Stage 4 - getting expert help on pensions.
Depending on what type of pension you and your ex have, the cash equivalent information might sometimes be enough for you to negotiate with your ex and reach an agreement. To work this out though you need to know what your ex has in terms of pensions.
Make sure you have the following for all of your pensions:
When you have all of these documents you need to give copies of them to your ex.
They need to get this information together for their pensions too and then you need to agree to show each other that information. If one of you has a lawyer this will be done via them. If you agree to go to mediation the paperwork can be shared through that process. If you don’t go to mediation or have a lawyer involved you will need to agree a date and method of exchanging your financial information yourselves.
If a case like yours ends up in court, the court requires that each of you fill in a long form, called Form E, about all your finances, not just pensions. This isn’t an easy form to do without some help. We have made a film about how to fill it in and also a guide - How to apply for a financial order without the help of a lawyer - that takes you through the form, step by step.
If you don’t end up in court you don’t have to fill in the Form E but you might find it helpful to anyway, as it shows you what level of detail is needed and gives some structure and order to the sharing of financial information. You can agree well in advance a date by when you are going to have your forms filled in and ready to give a copy to the other.
When you have swapped your information about your pensions with your ex, you are ready to work out (or get help to work out) if the information is complete and what you have is enough or if you need expert advice on the pensions in your case. We talk about this in Stage 3 - working out if you need expert help.
What to do if your ex won’t communicate with you on finances
Domestic abuse is not only about one person being physically violent to the other. It happens when one person controls the other in a family or intimate relationship. There are many different types of abuse including:
It can happen at any time and can often get worse when you split up, when your ex may try hard to keep controlling you. It can include behaviour by your ex to deliberately hide financial information and assets from you. To learn more about what economic abuse can look like have a look at the Surviving Economic Abuse website.
Have a look at the section called More help and advice if you think your ex has been or is being abusive to you.
If you are on a low income and can get evidence of the abuse you have experienced, you may be able to get legal aid to cover the costs of a solicitor. There are various rules about who can get legal aid so it is a good idea to Check if you can get legal aid on the gov.uk website and read more about this in our short guide called How to get legal aid for a family law problem.
I was really nervous about bringing up pensions with my husband when we separated. It was never easy to talk about money with him - it used to make him angry if I spoke up about it at all. I felt like I was walking on egg shells whenever anything like that came up.
I just knew he would be furious about me saying I might need some of his pension because he had worked to build it up, and I hadn’t.
My friend said even though I was nervous and even a bit scared I needed to do something about it. We sorted it out eventually through a solicitor. She was really supportive and encouraged me to get some help from a local domestic abuse charity.
Having the solicitor to speak to him for me made me feel less intimidated. He wasn’t at all happy, but when I realised I had the law on my side I felt a lot better.
There are several situations when the cash equivalent valuations don’t give a true value of your (or your ex’s) pension, particularly if they are Defined Benefit pensions. For a reminder on the different types of pensions you may have, take another look at Pensions - the basics.
If you do not understand the value of the benefits that come with your or your ex’s pension you may work out an agreement that is not fair. You may well do yourself out of getting a proper share of the real assets involved. This could mean you are a lot worse off when you stop working.
The table below explains when you may or will need more than just the cash equivalent valuations to get a proper sense of the value of the pensions in your case. If you find yourself in any of these situations it is likely that the money you need to spend to get expert help will be money very well spent down the line. In fact, the cost of not getting help and getting it wrong can be enormous - in terms of actual money - tens or even hundreds of thousands of pounds.
Situation 1 -
Pensions add up to more than cash equivalent valuation of £100,000
If the cash equivalent valuations for all your and your ex’s pensions add up to more than £100,000, particularly if any are Defined Benefit pensions, you should get expert help.
If all the pensions are Defined Contribution pensions (and they add up to £100,000 or more) and there is a significant age gap between you and your ex, you may well need expert help.
But beware - even if the cash equivalent figures add up to less than £100,000 but there are extra benefits to one or more of the pensions you may need an expert to help. Or if the cash equivalent figures add up to less than £100,000 but actually make up a large percentage of the overall assets in the case it may be useful to get expert help.
Situation 2 -
One (or more) Defined Benefit pension
Roughly speaking, if the cash equivalent of Defined Benefit pension is between £100-200k you may well need a report. If it is over £200k you will need an expert report.
If any of the pensions in your case is a uniformed public sector pension (such as the Police, Fire Service or Armed Forces) then you will probably need an expert to work out how it should be shared, whatever its value.
You could miss out on a lot if you just accept a cash equivalent valuation of a Defined Benefit pension from your ex. To see how this works look at Mike and Bridgette’s story below.
Situation 3 -
Defined Contribution pensions with extra benefits
Some older Defined Contribution pensions actually have some benefits attached to them which make them more like Defined Benefit pensions.
Examples of such benefits are built in guarantees, like a guaranteed lump sum when you retire. Some have a guaranteed annuity rate. This means that you are guaranteed a set rate on an annuity from that pension provider, which is higher than you could buy on the open market now. Guaranteed annuity rates can be extremely valuable and significantly change the value of the pension.
If any of the pensions in your case have extra benefits like this you may need to get an expert to help.
Situation 4 -
There is a significant age gap between you
If there is a significant age gap between you and your ex then it is more likely you will need expert help to work out how the pensions should be shared. This is because the younger of the two of you may not retire for many years and so the pension value will need to stay invested to meet the younger person’s needs but at the same time the older of the two of you is more likely to need income from a pension now or in the near future. An expert can explain how to work this out so it is fair to both of you.
Situation 5 -
If you are seriously thinking about the offsetting approach (where one of you keeps your pension and the other gets a greater share of another asset such as the family home) it is likely you will need an expert to help value the pension, especially if the pension is a Defined Benefit pension. This is because the cash equivalent figures just can’t tell you if, for example, keeping the family house now is a good trade-off for maybe ending up with no or very little pension later.
Pensions and other assets such as a house are such different things - often described as trying to compare apples and pears. Only an expert can tell you if a particular agreement using offsetting will end in a fair outcome in your circumstances.
An offsetting example
Gemma and Rachel own a family home worth around £400,000 and Gemma has a NHS pension with a cash equivalent value of £400,000. It might seem fair for Gemma to keep her pension and for Rachel to have the family home. But, in reality the true value of the NHS pension (measured by how much it would cost to buy those benefits on the open market with help from an expert) could be closer to £600k. So, this offset would not be a fair outcome for Rachel.
Situation 6 -
Serious medical condition
If one of you has a serious medical condition, diagnosed by a medical professional, which will probably impact on how long you are likely to live, you may be able to get a higher pension payment because it might be paid out over a shorter time than if you were in good health. You are likely to need help from an expert on this because it could impact on the division of the pensions.
Reason 7 -
When there is a choice of pensions to share
If you and your ex are in a position where there is a choice of pensions to share you are likely to need an expert to help with this. It might be better to share one type of pension, rather than another one. This is because some pensions can lose significant value when they are shared.
Mike and Bridgette - a case study
This is not a real case but it shows a typical situation. We hope it helps to show why just using the cash equivalent valuations in some situations may not lead to a fair outcome. Be aware that this is just giving you an example of the pensions in Mike and Bridgette’s divorce. Pensions are just one part of the jigsaw when sorting out a final agreement on finances.
Bridgette is 55 years old and has an NHS pension (Defined Benefit pension), with a recent cash equivalent valuation of £156,300. Under her pension scheme she is entitled to a preserved pension of £7,500 each year (she will never get less than this amount each year) and lump sum of £22,500, which she can get when she is 60.
Mike is 58 years old and has a Self-Invested Personal Pension (Defined Contribution pension), with a recent cash equivalent valuation of £200,000.
If just the cash equivalent valuations are used Mike has a cash equivalent valuation of £43,700 more than Bridgette. So it seems that to get to a fair outcome there may need to be a pension sharing order made in favour of Bridgette. Or maybe offsetting could take place, so that if Mike keeps all his pension Bridgette gets a bigger share of a different asset, such as any savings.
But actually, if Mike takes a lump sum of £22,500 from his pension to match that of Bridgette’s, his pension when he gets to 60 will be £5,200 each year compared with Bridgette’s £7,500 each year.
In this case, the cash equivalent valuations don’t give the full picture because the income from a Defined Benefit pension can be very different to that of a Defined Contribution pension even when the cash equivalent valuations are similar. If this couple just used the cash equivalent valuations, Bridgette would have got some of Mike’s pension when in fact her pension has more benefits and it is potentially Mike who should have a share of her pension or a greater share of another financial asset, not the other way round.
When one person (or both) has a Defined Benefit pension you need an expert to help work out what income both people will get when they retire so you can see what will end up being a fair outcome overall.
If you find yourself in any of the situations set out in Stage 3 - working out if you need expert help you really will need to get help, if you possibly can afford to, from an expert who can assess what all the pensions in the case are really worth.
There are different names for someone who can give this kind of advice. The one we are going to use in this guide is a Pensions on Divorce Expert.
There are other experts, legal and financial, that it may be very helpful to speak with too. While there may be an ideal way of having different professionals on hand to help, the approach that will work best depends on the circumstances of your case and, of course, on what you can afford.
In this next section we explain more about:
The word ‘lawyer’ is often used to describe someone who is legally qualified and trained to advise and represent you if you have a legal problem. There are three main types of regulated lawyers you could go to for legal advice about your divorce. These are solicitors, legal executives and barristers. If you want to, you can find out more about these different legal professionals in A survival guide to going to court when the other side has a lawyer and you don’t.
If you can afford it, it would be really sensible to get legal advice about where you stand in terms of the finances in your divorce, as early on as possible before you make any big decisions.
A lawyer can advise you on the pensions situation in your case and recommend a Pensions on Divorce Expert to you, if they think it would be a good use of money - mainly if you find yourself in any of the situations explained in Stage 3 - working out if you need expert help. If you agree to this and can afford it, it is common for the lawyer to instruct the Pensions on Divorce Expert - to ask them all the right questions to get a report that helps you (and your ex) find out the real value of the pensions, for the purposes of your divorce, and how they should be split.
If you and your ex decide to do this, it is very common for there to be just one expert, known as a ‘Single Joint Expert’ who writes a report for both of you (and the court, if you are going through the court process). There are a lot of rules about how this has to be done. They can be found in Part 25 of the Family Procedure Rules 2010 and in Practice Direction 25D. One important rule is that the expert must be impartial - not take one person’s side over the other. Another important rule is that all communications with the expert, however they take place, must be open and clear, to both you and your ex.
If you do use a Single Joint Expert you should:
It is also really important to understand that if you decide, by yourself, without a lawyer or without agreement with your ex, to ask a Pensions on Divorce Expert to do a report you will not be allowed to use it in court unless the court gives you permission.
When the report is done, if you can afford it, it then makes sense to get further advice from the lawyer on what would be a reasonable and fair outcome in terms of an overall agreement about finances.
You can get legal advice from any of the three different types of legal professionals listed above but often the starting point would be either a solicitor or legal executive. Barristers are usually instructed by solicitors or legal executives once a case is up and running. But some barristers now take cases direct from members of the public without a solicitor being involved. This is called ‘direct access’ or ‘public access’. You can find out more about direct access and if it is something that might work for you at the Direct Access Portal on the Bar Council website. You may find a barrister through this route who is happy to look at your case and advise you on whether you need a Pensions on Divorce Expert to do a report.
Another option to help you reduce costs at the start and to help you work out your options is to look into lawyers who may volunteer their time in your local area. For more on this take a look at the section called More help and advice.
Some family lawyers offer a particular approach to sorting out family law problems. This is called collaborative law. To use this approach you and your ex need to agree to both find your own collaboratively trained lawyer and the four of you all meet together to work things out. This can mean the negotiations are quicker than when using a lawyer in a more traditional way. You can find more information on this approach on the Resolution website.
If you decide to use a lawyer be sure to check out our top tips for finding a good one.
Our top tips for finding a good lawyer
If you can’t afford legal advice or you don’t want to spend what money you do have in that way, be sure to take a look at our other guides on working through the divorce process and sorting out your finances on divorce. You can find all of these and more in our Help with family problems section.
While a lawyer who specialises in divorce and finances can advise you on the law, they cannot give you financial advice.
Someone who is financially qualified and has experience in pensions on divorce can examine the pensions and if needs be, do a report on how they should be split. These people include:
But these experts are only Pensions on Divorce Experts as well if they are experienced in the area of pensions on divorce. Currently, there is no specific qualification that someone can get to become a Pensions on Divorce Expert. To try and deal with this, a group of judges, lawyers and Pensions on Divorce Experts called the Pension Advisory Group has written a long list of things a Pensions on Divorce Expert should be able to do if they are going to charge you for writing a report. The list is called a Self-certification of expertise. You can find it in the Pension Advisory Group’s Guide to the Treatment of Pensions on Divorce, Appendix D.
If you get advice from a lawyer, they are likely to recommend a Pensions on Divorce Expert who they work with. If you go to mediation it may be that the mediator can recommend one. If you decide to use an arbitrator (more about this in the next section) they can help you choose a Pensions on Divorce Expert or decide on one for you, in a similar way to a court would, if you and your ex can’t agree.
If you don’t get a recommendation and decide to find a Pensions on Divorce Expert yourself because you are in one of the situations set out in Stage 3 - working out if you need expert help, a good place to start is the Resolution website. Some of the financial professionals who are Resolution members have a special accreditation from Resolution to say they are experts in pensions. If you want to look for someone with the Resolution accreditation in pensions go to the Find a law professional page and click on ‘Advanced search’. Click on ‘Financial professional’ in the box called ‘Service offering’. Then go down to the box called ‘Type of Resolution Accreditation’ and choose the option ‘Pensions’. Then click ‘Search’. Do be aware that there are also many good Pensions on Divorce Experts who don’t have this accreditation.
Then, it is important to call around and ask some basic essential questions to work out if that professional has experience in dealing with pensions on divorce. Take a close look at their website and see what sort of work they say they do. If they say they deal with pensions on divorce and it says this somewhere prominent (rather than tucked away at the bottom of a long list), then this may be a good sign. It would be sensible to get a few quotes - just like you might if you wanted some building work done. This will help you work out the difference between a realistic cost for doing the work and something that is too good to be true.
So, there are different ways to find a Pension on Divorce Expert:
Be aware that there aren’t many financial professionals who are so specialised in pensions that they can call themselves Pensions on Divorce Experts. This means that they tend to take work across England and Wales, with communications by phone, email and Zoom. If you search using your postcode you may find that they are all rather far away. Don’t let this put you off. It’s possible you may not need to meet them in person often or even at all.
What to ask a financial professional to work out if they are the right Pensions on Divorce Expert for you
What to ask the Pensions on Divorce Expert
It is likely you will need help to work out what to ask the Pensions on Divorce Expert. This is because unless you happen to know a lot about pensions yourself you are unlikely to know what to ask. This will add to the costs but remember that in the situations set out in Stage 3 - working out if you need expert help this is likely to be money well spent - the cost of getting it wrong could be eye-watering.
Most Pensions on Divorce Experts are likely to say that you cannot ask them to produce a report yourself. Instead, they will ask that you go through a lawyer who will prepare the case and write a letter, often called a letter of instruction, explaining what the report needs to cover. This is because to provide a good quality report, that will be useful for you both, the report writer needs to be very clear on what is being asked of them.
Another option is to consult a Pensions on Divorce Expert about whether or not you need a report. And if they think you do, they will help you prepare the letter to another expert so that nothing important is missed out or that the costs aren’t increased by unnecessary questions. For example, they might be able to advise you on issues about tax and the pensions in the case that you might not be aware of. Or, they could pass you to someone else to help you with tax questions. They may even work with both of you to prepare the letter, which could save you money.
You may come across some Pensions on Divorce Experts who will do a report for you without another professional being involved to help with the letter. They will need you to give them information though and be as clear as possible about what you want them to report on. If you want to get a better idea of what might go in the letter to the Pensions on Divorce Expert, you can look at a sample letter in the Pension Advisory Group’s Guide to the treatment of pensions on divorce - Appendix E.
The costs of using a Pensions on Divorce Expert
The cost of paying for a Pensions on Divorce Expert to look at pension assets can put people off. But, if you find yourself in one of the situations outlined in Stage 3 - working out if you need expert help it is likely to be essential to your case to use one. Without one, it will be very hard to negotiate and agree on the percentage of the pension that should be shared, if any.
Some financial advisers who specialise in pensions on divorce may be willing to quickly review your situation to decide whether you need to start incurring fees and some might agree to you paying for their work once the case is finished.
If you need help with understanding your pension position generally to start with, a Pensions on Divorce Expert may well give you advice on what to do next and charge you for their time, by the hour. As a rough guide, hourly charges range from £200 to £300 per hour. You then need to add on VAT at 20%.
The costs vary depending on the individual expert, and how complicated your case is and how many questions you ask the expert. As a rough guide, costs generally range from £1,500 - £2,500 for a full report. You then need to add on VAT at 20%. Be aware that costs can be higher than this with larger or more complex pensions. Usually one expert, known as a ‘Single Joint Expert’ is asked to provide a report to both of you (and the court, if you are going through the court process). Often, when this happens the costs will be shared between you in some way.
If you find yourself in one of the situations in Stage 3 - working out if you need expert help and you can only manage to find money for a lawyer or a Pensions on Divorce Expert, you will need to decide whether that money will be best spent on getting help from the Pensions on Divorce Expert or a lawyer. If you are not sure what to do, it would be sensible to get a bit advice from a family lawyer first and make sure you mention what pensions you and your ex have.
I was trying to sort things out with my husband. We had the house and he had a decent pension from being senior at the council for years.
He got a solicitor who said the house was worth about £350,000 and the pension paperwork said that was worth about £420,000. So, he said I could keep the house and he would keep his pension. This seemed decent enough and I really didn’t want a big drawn out fight. Anyway, a friend made me think about it some more, going on about how good a council pension would be, better than that and that I needed some help.
Eventually a solicitor told me I needed to speak to this financial adviser she worked with who knew about pensions. I barely had any money and had to borrow it from my sister. I only did it because the solicitor said I really had to, or I would regret it. She said if I could only pay for her or the pensions chap, I needed to pay him. So I did. He helped me to understand it a lot more - he set out the figures and everything and explained that really the pension was worth over £800,000 because of all the extra benefits. In the end the court said that I could keep the house and I got a third of the pension to live off. It was unbelievable. I would have accepted just the house, you know. As I just had no clue about the value of his pension.
How long it takes
For a Pensions on Divorce Expert to write a report for both you and your ex, they need to get lots of information from all your pension providers. To do this they have to send a letter to all the pension providers, that you sign, that says you authorise the pension provider to give all that information over to the Pension on Divorce Expert. Unfortunately, it can often take a few months for the pension providers to send over all the information.
As a rough guide, once the Pension on Divorce Expert has all the information they need from the pension providers, they can often do their report in around 4 weeks, depending on how busy they are and how long it is taking the pension providers to answer their questions. In total, it could take around 6 months.
While this can seem to be a complicated process it is really important to do it properly to get a fair outcome.
The sooner you (and your ex) start to look at pensions and get help the better - if you leave it until the end, getting a report will cause more delay to the divorce.
Sorting out pensions properly will generally mean the divorce process takes longer, but it is really important for you in later life so that you avoid financial hardship. It really will be worth spending some time and money on this now to reduce the risk of financial hardship when you are retired.
I feel as if I can make – with help – a decision that’s going to be the best decision for me.
If you are not in a position to get legal advice at this point you need to work your way through this next stage - weighing up the options on how to divide up the pensions in the case.
There are four common ways of dividing up pension funds, particularly after a long marriage. We explain these options next.
Option 1 is to divide the pensions according to the income they will produce. If you are older and/or you have significant pension funds, then it is important to think about what both your income needs will be when you retire.
If you have both retired already, or are close to retirement, work out a budget showing your needs compared with your resources. This should tell you what income needs you each have. You can then share the pension funds in the proportions which will provide enough income to each of you to cover your retirement income needs. If there is insufficient income to meet those needs, there is rarely any reason why the shortage should fall disproportionately on only one of you.
By this stage of your life, any children you have are probably no longer financially dependent on you. This is likely to mean that your needs in retirement will be similar. So, unless there is reason not to, for example because yours was a short marriage, then a judge’s approach is often to divide the pension funds to equalise income in retirement. To do this it is likely that a pension sharing order will be needed. This is because it is highly unlikely you and your ex will both have pension pots that are worth the same. All the pensions in the case will be considered, even really small ones, to work out what will be fair in terms of a pension sharing order. So, a court order will be needed to tell one pension provider to share some of one person’s pension with the other person. (Even if the cash equivalent values are close to each other, each pension may have different benefits attached. That means the income may well be quite different).
If neither of you are close to retirement, it will probably be difficult to predict with any certainty what your financial positions and needs will be when you do retire. Again, the court will often assume that you are likely to have similar needs and so will normally share out the pensions to equalise retirement income.
How to work out what income a pension will give you
Defined Contribution pensions
Your annual statement for your Defined Contribution pension gives you an estimate of what you may get as an income when you retire. But unless you are very near to retirement this will change, depending on the amount of contributions made between now and then. Also, Defined Contribution pension pot values go up and down according to how the investments perform over the years. To fully understand the statement and the amount of income you may get at retirement you may well need some advice from a financial adviser.
If you are trying to compare the income across different types of pensions you will need a Pensions on Divorce Expert to help you. This is because the different benefits will affect what income is produced when the pension is paid out. For example if you had two pensions giving the exact same income but one came with a benefit where each year the payments increased to recognise increases in the costs of living, that would be a more generous pension income over time.
Defined Benefit pensions
Your annual statement for your Defined Benefit pension gives you an estimate of what you will get as an income when you retire. But you will also need to consider the statement of benefits as Defined Benefit pensions often come with extra benefits as well. Really, you are likely to need a Pensions on Divorce Expert to help you work out what the statement of benefits means.
How to work out what income a pension sharing order will give you
It is very hard to work out what income you would actually get from a pension sharing order without getting an expert to help, regardless of the type of pensions involved.
When a pension sharing order is made the court requires the cash equivalent valuation of the pension to be shared and describes the share to go to the other person as a percentage of the cash equivalent. The person who benefits from the pension sharing order will usually need to pay income tax on the money they eventually get.
You might expect that a 50% share of your ex’s pension pot would give you the same income in retirement. Unfortunately, it is far from being that simple. This is mainly because the person receiving the share usually has to set up a new pension pot and cannot usually buy a new pension that is as good as the original pension. This is especially the case if the pension is a Defined Benefit pension. Also, the person with the pension can sometimes find that after pension sharing order is made against their pension, they may well be left with less than half of their expected pension.
If you think that dividing up the pension pots in your case to work out the income is the approach you need to take, you will need to get help from a Pensions on Divorce Expert. For a reminder on how to do this take another look at Stage 4 - getting expert help on pensions.
Option 2 is to divide the pensions according to the cash equivalent valuations. The court may take this approach if:
In these situations, the court may sometimes just divide the capital value of the pensions, using the cash equivalent figures, and not look at what that means in terms of income for you both when you retire.
Sometimes in a short marriage the cash equivalent of the pension pot will not be divided in half. Instead one person might get a bigger share to recognise the pension they built before the marriage. This tends to only happen when the marriage is short and there aren’t any young children. Overall, the court is always looking for an outcome that it views as fair. We talk more about this in the section below called Dividing pension funds unequally.
You should only consider this option if you are sure that you do not find yourself in any of the situations set out in Stage 3 - working out if you need expert help. In those situations just using the cash equivalent valuations will probably not result in a fair outcome. Usually it is only a suitable approach if all the pensions are Defined Contribution pensions with no added benefits at all and it can be difficult to know if this is the situation you are in without getting advice.
Clara and Thomas - a case study
This is not a real case but it shows a typical situation. We hope it helps to show that dividing the pension pot equally using the cash equivalent valuation will not always mean you both get the same income when you get your pension.
Thomas is age 65 and receiving his Defined Benefit pension of £30,000 each year. His ex, Clara, is age 60 and has no private pensions of her own. They want to share the income equally when they finalise their divorce. They know, from a friend who had been through it all before, they can ask the court to share out the pension pot equally between them. Thomas gets his pension provider to send him a valuation. The cash equivalent valuation is £700,000. They expect that Thomas’ income will go down to £15,000 each year and Clara’s will go up by £15,000 when she gets the pension all set up.
They decide it isn’t too complicated and they agree on what should happen, so they don’t get advice from a lawyer or a financial adviser. They apply to the court and the judge approves their agreement.
Thomas’ pension is reduced to £15,000 each year, as they expected. When the pension provider implements the order, Clara gets a pension credit of £350,000 (exactly half of the cash equivalent valuation of Thomas’ pension pot). She gets help from a financial adviser about where to place the money to get the best income. She wants something safe and the financial adviser recommends that the safest option is to buy an annuity which gives a guaranteed income for life. However, she is horrified to find out that her £350,000 can only buy an annuity income of £8,600 each year, which is not much more than half of Thomas’ income.
After the making of the pension sharing order, Thomas’ original pension income of £30,000 each year is now only paying £23,600 each year between them. Once the pension sharing order is implemented by the pension provider it cannot be undone.
Both Thomas and Clara now wish they had taken some advice before deciding what to do with Thomas’ pension.
Option 3 is to share the pensions using a capital value that is different to the cash equivalent value. You definitely need an expert to do this. Sometimes an expert does this when there are Defined Benefit pensions involved and where they are asked to by the people in the case or the court. But this option can lead to unintended consequences for both you and your ex.
The capital value worked out by the expert can sometimes end up being higher than the cash equivalent value of the pension pot. You might think that this higher value would then be used to work out your or your ex’s share but actually only the cash equivalent value can be shared when it comes to the pension sharing order. The expert’s calculation of the capital value has to be translated into a figure which is a percentage of the cash equivalent value. This can be confusing. Because of this, this option is less common than option one (above), where an expert works out how to divide the pension pot to give you and your ex the same income when you retire.
The final option is offsetting the pension pot against other financial assets. This is where you agree that one of you keeps their pension funds, or a larger share of the funds, in return for the other having other assets or a larger share of them. So, for example, if you are the parent with the main care of the children, you could keep the family home while your ex keeps the pension funds. This is one way of balancing the division of the assets between you.
However, you need to approach offsetting with a great deal of care. Comparing the value of one pension fund with another or with other types of assets is not straightforward. Also, if you are the person giving up a claim to a share of a pension fund, you run the risk of being short of income in retirement. If you are the person keeping the pension, you may have difficulty in meeting your housing needs. If you are in late middle age it would be sensible to think very carefully about fighting to stay in the family home, that may now be too big for your needs, if this means you will lose out on a valuable share of the pension pot.
So far we have explained that often the approach taken by the judge will be to equalise pensions - either in terms of the income you will both have when you retire or in terms of the capital value when a pension sharing order is made.
However, there may be reasons for dividing your pension funds unequally, such as:
There may be other reasons that are not included in this list that apply to your situation. Do remember that pensions are only one bit of the jigsaw when sorting out your finances. To read more about how the court deals with finances on divorce take a look at A survival guide to sorting out your finances when you get divorced, and especially the section called What the law says.
'Unfortunately when we got divorced neither of us got any legal advice and we agreed the property issue between ourselves. However nothing was said about pensions. I am now wondering what my rights are if any?'
'It depends. If you have no court order about your finances when you divorced, if you have not re-married and if your ex-husband, wife or civil partner is still alive, you may be able to apply to the court for a financial order. The more time that has passed since you divorced the harder it may be to do this. To start with, it would be a good idea to get some legal advice from a family law specialist. To find one take a look at the section called More help and advice
You can come to an agreement:
1. Between yourselves, or
2. in mediation or another form of dispute resolution process,
3. Using lawyers to negotiate on your behalf, or
4. A combination of all these.
However you do it, you will both need to compromise. It might feel like reaching an agreement is impossible right now. But even if you do go to court, it is important to understand that very few cases end up going to what is known as a final hearing where the judge decides what should happen for you. Instead, you are encouraged to reach an agreement and compromise at every stage.
'Do we have to use mediation?'
'No. You do not have to use mediation to make an agreement. You may be able to reach agreement between yourselves, perhaps having had legal advice from specialist family lawyers.
If there was or still is any form of domestic abuse or control in your relationship mediation will probably not be suitable. A mediator can help you work this out, if you are not sure.
However, if you cannot agree and you want the court to decide how to share out your assets, then you will have to attend a Mediation Information and Assessment Meeting (MIAM). This meeting enables you to find out more about how mediation works, including whether it is right for you, how long it is likely to take and how much it is likely to cost. After you have been to this meeting you don’t have to carry on with mediation if it isn’t right for your situation.
In some situations you do not have to attend a Mediation Information and Assessment Meeting before you send your application to the court, for example, if you have suffered domestic violence or abuse, For more information, see the Family Mediation Council website.'
No matter how you work out an agreement, you must provide your ex (and the court if the case goes to court) with all the details of your finances. This is a very important rule in the family court and is called ‘full and frank disclosure’. You can’t hide, for example, things of value that are just in your name, like a pension. It is not possible to reach a fair outcome if either, or even both of you, don’t fully share information about your finances. The court takes this very seriously. If it can been shown that one person has failed to follow the rules the court can:
To read more about these different ways of reaching an agreement take a look at the section called Ways of sorting out your finances in A survival guide to sorting out your finances when you get divorced. The next few sections of that guide then tell you about what the law says, to help you have a better understanding of what a fair outcome overall might look like in your case, with some examples.
If you do decide to work out an agreement yourselves or with the help of a mediator, it is sensible to both take a bit of legal advice first, to know what you should be aiming for. Take a look at the section called More help and advice for details of how to find a lawyer who specialises in family law and in pensions in particular.
'Do we have to go to court?'
'No. It is usually better if you can reach an agreement together about how to share your assets, perhaps with the help and advice of solicitors and/or a mediator. Using a solicitor doesn’t mean you have to go to court, but it is important to remember that to sort out your finances properly with a legally binding agreement you need to put the agreement into the form of a draft consent order for the judge to approve. The section called Stage 7 - the next steps when you have an agreement, or what to do if you can’t agree explains more about this.
Another option is arbitration. This is a way of resolving a dispute outside a formal court room but with the help of a qualified arbitrator who makes a decision that you are bound by. The process can be quicker than going through the court process as you decide who the arbitrator will be and agree the timetable yourselves. You can also narrow down the issues you want the arbitrator to look at which may make it cheaper than a longer drawn out court process. There is a helpful guide all about this approach on the Institute of Family Law Arbitrators website.'
When we had our son my wife had to go back to her teaching job full time. As I was able to reduce my hours, we agreed I would do most of the week day childcare. Over the years this of course had an impact on my pension pot. My wife was able to really grow her pension over the years, while mine didn’t really increase much at all.
Later on we separated. My wife was very clear that her pension was ‘her pension’ - she had no intention of sharing it with me. She said she had worked hard to build it up and it was in her name, not mine. She seemed furious at my suggestion that I might need some of it to live off when I stopped working altogether. She didn’t or wouldn’t see that my caring for our son for all those years had impacted on my chance of getting well-paid, full time work once he was older.
To start with I was very angry but when I calmed down and got some advice from a solicitor I realised there was something I could do about it. Often you hear people say the law always helps the wife when couples divorce. But actually, the law makes sure the person who hasn’t had a chance to build up a pension isn’t just left with nothing in retirement. This can often be the wife, but it wasn’t for us.
What to do next depends on if you have managed to reach an agreement with your ex on how to settle finances, or not.
If you have an agreement, read this bit on what to do next. If you haven’t managed to reach an agreement skip to the bit called 'What to do if you can’t agree'.
If you have managed to reach an agreement with your ex about your finances the next step is to finalise it through the court. To do this your agreement needs to be turned into what is known as a ‘consent order’.
A consent order turns what you have agreed between you into a court order. Your agreement without a consent order is informal, not final, and strictly speaking, not legally binding on you. This means it cannot be enforced by the court (although in some situations the court may be willing to turn a clear agreement into a consent order if one person was unreasonably trying to get out of it).
When a consent order is made the court can make sure that what you have agreed actually happens. And, if the consent order is done properly (by a family lawyer), neither person should be able to ask the court to make a different financial order in the future.
Without a consent order, (or a final order made by the court at a final hearing), it is always possible for either you or your ex to apply to the court for something different to what you originally agreed, even long after you are divorced. This right is only lost when you remarry (although an exception to this rule is that the court can make pension sharing or attachment orders even when someone re-married).
If you have agreed that you want to share a pension, then you will always have to get a consent order because pensions cannot be shared by private agreement. The pension provider has to receive an order from the court telling them to share the fund.
So, it is important to put any agreement you reach into a draft consent order for the court to approve if you want to:
Step 1 - applying for your divorce
Before you can apply for a consent order to finalise your financial agreement one of you needs to apply to the court for a divorce. There are various stages to getting a divorce. The court can only look at your application for a consent order when you have reached the decree nisi stage of the divorce. If you are dissolving your civil partnership this order is called a conditional order. This takes some time so if you (or your ex) haven’t applied for a divorce yet, you need to start there. For more on this take a look at our guide How to get a divorce or end a civil partnership without the help of a lawyer.
To get a consent order, you must apply to the court by sending in the draft consent order and other paperwork the court needs. Preparing even a simple draft consent order that will be accepted by a judge is not an easy task at all. You may well need some, or even a lot of, help from a lawyer.
It is also sensible to get legal advice on what you have actually agreed with your ex. It might be that there are things that you have not thought of, or are not aware of, that leaves one of you worse off. Without input from a lawyer on the fairness of the agreement there is a risk that a judge will look at the agreement and decide that it does not result in a fair outcome overall and will not approve it. If the judge refuses to make the order you have asked for, they will send it back to you and ask you to change it. Or, the judge may make the order without knowing that there were other important things missed out. This could cause you problems down the line. It’s better to be well informed before you spend time, money and energy applying to court. If you do need to start again you will probably need legal advice on how to reach an agreement the court will approve. This will take time and money.
You can find out more about getting expert legal advice on your agreement and help drafting a consent order in the section called Consent orders in our guide How to apply for a financial order without the help of a lawyer.
Step 2 - things to sort out if you are going to ask the court to make a pension sharing order
If your agreement with your ex includes asking the court to make a pension sharing order, there are forms you need to fill in and send to the court. There are important things you need to do before you can complete these forms.
When the court makes a pension sharing order, that order gets sent to the pension fund manager and they have to make sure the pension share actually happens. This is known as ‘implementing’ the pension sharing order. Various things have to be arranged in advance for this to work. These are:
If you are going to benefit from the pension sharing order where money, also known as ‘pension credit’, is taken from your ex’s pension, you need to work out where this is actually going to go.
One option is where the pension provider creates a pension for you within their scheme that is separate from your ex’s pension. This is known as an ‘internal transfer’. But, most pension providers, unless they are public sector pension schemes, will not do this - instead they say you need to transfer it to a pension scheme of your own. This is known as an ‘external transfer’. If you already have a pension scheme you may be able to get the money transferred to that pension scheme, if it is suitable. But if you don’t, you will need to set up a new pension scheme. It is a good idea to get independent financial advice on choosing a new pension scheme. A lawyer cannot give financial advice.
You might find that the pension provider offers you the choice of an ‘internal’ or ‘external’ transfer. And you will need to decide if you want your share of the pension to stay with your ex’s pension provider or if you want to move it to a different one. Deciding which will give you the best outcome financially is very difficult without advice from a financial adviser who specialises in pensions on divorce.
When you have worked out where your share of the pension is going to go you need to get it all set up so that you have the actual details of the new pension fund as you need these for the application to the court and you need to give them to your ex’s pension scheme.
Many pension providers charge a fee for the work they have to do to make the pension share happen - this is known as ‘implementing’ the pension sharing order. You will see what charges your pension provider charges in their answers to your Form P. The fees vary a lot, from no fee at all to around £4,000.
You need to discuss how you will divide these charges between you and your ex. Depending on your circumstances it may be fair to divide the costs equally. Or if one of you is far more financially secure it is likely to be fairer if that person pays all the charges. It is a good idea to find out from the pension provider how much the charges are in advance, so that you and / or your ex are ready with the money when you need to pay. The person receiving the pension share can often have their share of the fees deducted from their share before it is transferred to their new pension.
Sometimes paying this fee is the very last thing that has to be done in the divorce process. Some people can be difficult about paying the money, to hold up the process and to upset the person who will benefit from the pension sharing order. This can be a way of trying to control the other person right until the end of the marriage.
If you think your ex may behave in this way it is possible to ask that they give something called an ‘undertaking’ to the court. An undertaking is a formal promise to the court which can be enforced like a court order. A person who breaches an undertaking can be found to be in contempt of court and punished with a fine or a prison sentence or both. In this situation if you are worried your ex might hold things up, they could give an undertaking to do all that is necessary to ensure that the pension sharing order is implemented.
Step 3 - paperwork you need to agree on and complete
Step 4 - preparing your application for a consent order and sending it to the court
When you have heard back from the pension provider that they have no objections to your draft consent order you can take the next step of finalising all the paperwork and sending it to the court.
To ask the judge to look at and approve your draft consent order you need to prepare and send the following to the court:
If you can afford to get any help from a specialist family lawyer with these documents, it will be worthwhile. It is not a simple process and they can help guide you through it. You may find a lawyer who is happy to do bits of the work and suggest where you can save costs by doing the less complicated bits yourself. Even if you end up doing most of it yourself, it would be a really good idea to get it all checked over by a lawyer before you send it to court. This way, any errors can be picked up so it is less likely to be rejected by the judge - which will of course save you time and stress in the long run.
When all the documents are ready make a copy for your own records. Then you need to send all the paperwork and the fee (or help with court fees form) to the court that is dealing with your divorce. You can find the details of that court on the court paperwork you have about your divorce.
What happens next
The court will put your application on their system and then a judge will look at it - this could take around a few weeks but it could take a lot longer depending on how busy the court is.
If the judge agrees that the draft consent order will give you both a fair outcome they will approve it. Then the court will send copies of the order to you and your ex.
If the judge refuses to approve the consent order you will probably need to get legal advice on how to change it in line with whatever comments the judge made when they rejected it. Take a look at the section called More help and advice on how to find a good lawyer.
If you have a Will you need to change it when your divorce is finalised - that is the date of your decree absolute. This is because, when it comes to your Will, it is as though your ex died on that date. Anything you leave to your ex in your Will won’t go to them. Instead of your estate passing to your ex it could pass in line with the intestacy rules. This means your estate may not go to a new partner (unless you have entered into a new marriage or civil partnership).
If you don’t have a Will it is really important to make one so that when you die what you own goes to the person or people you want it to, rather than in line with the intestacy rules.
If talking about making a Will has made you wonder what will happen to your pension(s) when you die, a good place to start learning more about this is the Pensions Advisory Service section called ‘What happens when I die?’
When to apply for decree absolute
The next step is to apply for decree absolute, or your final order if you are ending your civil partnership. You can find out more about this in How to get a divorce or end a civil partnership without the help of a lawyer.
After the ups and downs you have been through and after all the time it has taken you to get here, you will probably be keen to apply for the decree absolute as soon as you can. But there is a very good reason to hold off for 28 days after the date that the court approves the consent order. We explain why next.
The pension sharing order only becomes legally binding or as the law calls it - ‘it takes effect’ - after the decree absolute is made, whenever that is.
The pension sharing order takes effect on whichever is the later of these two dates:
If you apply for decree absolute straight away after the consent order is made, your divorce will be finalised before the pension sharing order takes effect. This would mean you would no longer be married. If the person with the pension died unexpectedly in this time, before the 28 days had passed, you would not be legally entitled to receive potentially very valuable death benefits under the pension as the pension holder’s husband, wife or civil partner. But also, the rights you are entitled to under the pension sharing order would not yet have taken effect. This means you would lose out completely on the pensions in the case.
So, to avoid this unlikely but potentially catastrophic situation, it is usually best to wait 28 days from the date the judge approved the order, before applying for your decree absolute. Then the pension sharing order takes effect as soon as the decree absolute is made. It can be a good idea to include a section in the consent order that records that you both undertake not to apply for a decree absolute until 28 days after the date the order is made. It is a good idea for the person who applied for the divorce in the first place to give an undertaking that they will do everything needed to apply for decree absolute as quickly as possible after the 28 days have passed. For a reminder on what an undertaking is take a look at the section called What does it mean?
Making sure the pension sharing order is implemented
When you have the approved consent order and the decree absolute you can ask the pension provider to get on with the task of making the pension share happen, known as ‘implementing’ the pension sharing order. The pension provider will not start on the task until they have been sent everything they need.
They will definitely need the following (but may ask for other things too):
The pension provider then has 4 months from the date of receiving all of documents they require to implement the order.
If you are the person who is going to benefit from the pension share it is usual for you to send all the paperwork to the pension provider and make sure they have received payment from whoever is due to pay their fees. It is a good idea to send the documents as soon as possible after you receive them. So, for example, send the pension provider the copy of the consent order as soon as you can and then send the decree absolute later. This lets the pension provider know that an order has been made and that you are now due to benefit from the pension as well, not just your ex.
Implementing the pension sharing order is quite a complicated process and sometimes pension providers actually make mistakes when transferring the pension share to a new pension scheme. So, if you can find the money to get advice from a financial adviser familiar with this process to help you through it and to check that the order has been properly put into action, it is likely to be money well spent.
If neither of these work, because your ex is being generally uncooperative or extremely slow, then your only option will be to apply to court if you want to finalise your divorce and sort out finances. Your ex may be in touch with you but you might be worried they are not telling you everything about their finances. This can happen even when you have a lawyer to help. You may find you need the court’s help to make your ex provide all their financial information. If you are worried that your ex is spending too much money on purpose to stop you from getting a fair share or hiding assets in some way, you need to urgently get advice from a lawyer on how you may be able to stop this. See the section called More help and advice.
It can feel daunting to start talking about court with your ex if you don’t communicate easily or, even, at all. There two sample letters at the end of this guide that you might want to adapt and send or email to your ex to bring up the issues in a calm but firm way.
If you think you may need to apply to court start by taking a look at our guide called How to apply for a financial order without the help of a lawyer. The guide takes you through the whole process step by step.
For more help on pensions generally, the place to go is the Pensions Advisory Service website. They have a lot of useful free information. If you want to talk to an independent adviser for free you can call one of their helplines. They also offer web chat. If you want to write to them you can ask for help through their Contact us page.
Helplines are open from 9am to 5pm, Monday to Friday (except public holidays):
8.45am to 6:20pm - Monday, Wednesday & Friday (except public holidays)
9am to 6.20pm Tuesday & Thursday (except public holidays)
If you are aged 50 or over you can get free and independent guidance from Pension Wise about decisions around your pension if it is a Defined Contribution pension. They cannot help if you have a Defined Benefit pension. They offer a free 45-60 minute appointment with a pension specialist. You can book an appointment on their website or calling 0800 138 3944 between 8am to 8pm, Monday to Friday. You will then get an email to confirm your booking.
If you found our guide useful but you want more information on how to deal with pensions on divorce you can find more details in a report published by the Pension Advisory group called A Guide to the Treatment of Pensions on Divorce. The Pension Advisory Group’s report is written for people working in this area, such as judges, lawyers and Pensions on Divorce Experts. Our guide is based on their report.
If you think you may need to complain about a pension scheme provided by your employer or a pension you have set up, you can contact The Pensions Ombudsman. They offer a free and independent service. You can phone them for help on 0800 917 4487, Monday to Friday, 9.00am-5.00pm or email email@example.com
For help on finances more generally the Money Advice Service has useful sections on money and pensions and money and divorce. You can also call them for free and impartial money advice on 0800 138 7777 (Typetalk: 18001 0800 915 4622), Monday to Friday, 8am to 6pm. They also offer a web chat service which is available Monday to Friday, 8am to 6pm and Saturday, 8am to 3pm. Both services are closed on Saturday, Sunday and Bank Holidays.
For help with benefits, the charity Turn2us offer support around working out what benefits to claim or grants you may be able to get if you are struggling financially. They have an online benefits calculator and grants search option. If you struggle with using these services online they also have a helpline.
For free initial help LawWorks might be a good place to start. LawWorks supports a network of over 280 free legal advice clinics that provide initial advice to individuals on various areas of law. Use their search option to see if there is a clinic near you that offers family law advice. Another option might be a law centre where lawyers sometimes give free legal advice on family law issues. Use the Law Centres Network search option to see if there is a law centre near you.
For help finding a family lawyer a good place to start is Resolution where you can find lawyers by searching using your postcode. Resolution members must commit to helping you work out your legal problem in a non-confrontational way. A green tick next to the lawyer’s name tells you that they offer legal aid. You can find an accredited lawyer who is a specialist in finances on divorce by going to the ‘Find a law professional’ page. Then, click on ‘advanced search’. Click on Type of Resolution accreditation’ and choose ‘Complex lower income financial remedies’ and ‘Pensions’.
You can also search for a specialist lawyer near you who has been accredited by the Law Society. This means they have a significant amount of experience and expertise and have passed a Law Society assessment. On the Law Society Find a solicitor page you can click on ‘More search options’ on the right at the bottom of the box. This gives more options to choose from. Here you can tick the accreditation box for ‘Family’ or ‘Family - advanced’, or both. You can also find a family lawyer via the gov.uk website by searching online for 'find a legal aid adviser or family mediator'.
Some family law specialists do extra training in an approach to solving legal problems called collaborative law. If you use this approach, each of you agree to use a collaboratively trained lawyer and have meetings together to try and solve the issues without going to court. You can search for a collaboratively trained lawyer on the Resolution website by choosing ‘Collaborative practitioner’ in the Service offering box.
For help finding a Pensions on Divorce Expert (or PODE) a good place to start is the Resolution website. Search for a ‘financial professional’ in the section called ‘service offering’ on the Find a law professional page. Then use an online search engine to learn more about what the professionals you have found on the Resolution website offer as part of their service.
If you are looking for a family mediator you could ask friends and family for a recommendation or your solicitor, if you have one. It is a good idea to check any recommendations using the family mediator finder service on the Family Mediation Council website. It is fine to phone around, ask how much they charge and compare prices. For more useful information on mediation as a process have a look at A survival guide to using family mediation after a break up.
If you and your ex decide that you want to involve an arbitrator to decide parts of the case that you cannot agree on, you can get help finding an arbitrator on the Institute of Family Law Arbitrators website.
If your case ends up in court a good place to start looking for more information is our Going to the family court page. This brings together all our resources and has information on where to go for practical help, legal advice and representation at court. If you end up going to court without a lawyer we have a guide that you may find useful - A survival guide to going to court when the other side has a lawyer and you don’t. We also have a film to help you prepare - Representing yourself in the family court.
If your ex has been or is being abusive to you there are lots of places you can find out more information and get support. Always dial 999 in an emergency. For support or to discuss your options you can call the National Domestic Violence Helpline on 0808 2000 247 or in Wales, Live Fear Free on 0808 80 10 800.
Both help lines are for anyone who is experiencing, or has experienced domestic abuse, or for anyone who is worried about domestic abuse happening to a friend, family member or colleague. It is free, confidential and the number will not show up on a BT telephone bill.
If you are a man and you or your children are affected by domestic violence or abuse you can contact the Men’s Advice Line on 0808 801 0327. The DYN project provides support to men in Wales who are experiencing domestic abuse from a partner. You can contact them on 0808 801 0321.
Galop runs a national helpline for lesbian, gay, bisexual and trans people experiencing domestic abuse. You can contact them on 0800 999 5428.
You can find more information and support from:
Accrual rate - this is the proportion of your salary you’ll get as an annual retirement income, and is set by your employer. The accrual rate is usually written as a fraction of your pensionable pay. So for example, if the accrual rate is 1/80th, you will get 1/80th of your pensionable pay as a pension for each year that you have worked.
Actuary - there are different types of actuaries. Actuaries that specialise in pensions use their mathematical skills to work out what benefits a pension has and what that will mean in years to come for you in terms of your income and other financial benefits. If they specialise in pensions on divorce then they can also advise on what the different options for dealing with pensions would mean for you and your ex.
Additional State Pension - this is part of the pension provided by the government to people who reached state retirement age on or before 6th April 2016. Not everyone gets this - it depends on the type of pension arrangements you had over your working lifetime.
Annuity - this is an annual payment that provides a regular income in retirement. This regular income can be for the rest of your life or for a set number of years. The amount you get is set in advance and can either remain level or increase in a number of different ways.
Basic State Pension - This is the pension provided by the government to people reaching state pension retirement age on or before 6th April 2016. The amount you get is based on your National Insurance contributions made before 6th April 2016.
Cash equivalent (CE) - this is sometimes also called the cash equivalent transfer value (CETV) or the cash equivalent value (CEV). This is the capital value given to your pension pot by your pension provider. Beware that it does not give you any idea as to the other benefits that may come with the pension and which could in reality make your or your ex’s pension much more valuable in retirement.
Defined Benefit pension - Defined Benefit pensions are workplace pensions, run by your employer. These pension plans are sometimes called ‘final salary’ or ‘salary-related’ pensions, but there are other types too. The value is based on how long you’ve worked for your employer and your salary. The amount you will get on retirement is set or ‘defined’ at the start.
Defined Contribution pension - These are the most common type of private pension. The pension pot is based on how much is paid in, how long it has been invested for and how well the investments perform. What you get when you retire is not set in advance.
Financial order - A ‘financial order’ or 'financial remedy order' is what the law calls a court order that sets out how the finances you both have should be sorted out when your divorce is finalised.
Financial planner / financial adviser - this is someone who can help you by advising you widely about all of your financial needs.
Guaranteed Annuity Rate (GAR) - older private pensions (typically before 1990) sometimes came with a promised or ‘guaranteed’ rate of income that you would get on retirement. This is usually a very valuable benefit to have.
Independent financial adviser (IFA) - this is a financial adviser who works independently and so can advise you on all the different financial products or options available rather than just the ones from certain providers.
New State Pension - the pension you get from the government if you reach state pension age after 6th April 2016. The amount you get depends on your National Insurance contributions.
Offsetting - this can happen when a couple are sorting out their finances on divorce. It is the word used to explain the approach where one person gives up their right to a future income from a pension in exchange for current capital, often the family home.
Pension attachment order - this is an order that the court can make when a couple divorce, where a percentage of your pension lump sum, death in service benefits or income is paid to your ex when you retire, or the other way round.
Pension credit - if you benefit from a pension sharing order, this is the money or capital that gets taken from your ex’s pension and put in a pension for you.
Pension freedoms - enable people to access some of their Defined Contribution pension pot in cash from the age of 55 if they want to, rather than waiting till they get older and have it as an income.
Pensions on Divorce Expert (PODE) - A Pensions on Divorce Expert can examine the pensions you both have and report on what their ‘true’ values are - for the purposes of the divorce. These people include financial advisers, financial planners and actuaries. But they are only Pensions on Divorce Experts as well if they are experienced in the area of pensions on divorce. There is no specific qualification that someone can get to become a Pensions on Divorce Expert. So, lots of experience of this type of work is key.
Pension sharing order - this is an order that the court can make when a couple divorce, which shares out your pension savings between you. A pension sharing order tells the providers of a pension fund to transfer a percentage of the cash equivalent (anything up to 100%) to whichever one of you is to benefit from the order.
Protected Payment - this is in addition to the new State Pension, for people reaching State Pension age on or after 6th April 2016. You are only entitled to it if you had a significant Additional State Pension before 6th April 2016. A calculation was used to work out how much you could carry over into the new system. That amount is then ‘protected’.
Substitution - if you reached State Pension Age before or on 6th April 2016 and your ex had better National Insurance contributions than you (perhaps because you didn’t work outside of the home for many years) you can apply to substitute your ex’s record for your own, if it is higher. This can increase your basic State Pension payments without reducing your ex’s.
Undertaking - this is a formal promise to the court which can be enforced like a court order. A person who breaches an undertaking can be found to be in contempt of court and punished with a fine or a prison sentence or both.
Sample letter to send to the Pensions Service to ask that your National Insurance record be substituted with your ex’s record, so you get a better record
[add in your full postal address here]
[add the date here]
[add the full address here]
Dear Sir or Madam
Re: National Insurance record substitution request
I am writing to request that my National Insurance record be substituted with my ex [husband/wife/civil partner’s record. My National Insurance number is [add in your National Insurance number].
Their details are as follows:
Please find enclosed a certified copy of my decree absolute.
I look forward to hearing from you in relation to the above.
[add your full name]
A sample letter to send to your pension provider(s) if you have a Defined Benefit pension, to get information about the value of the pension
[add your full postal address here]
[add the date here]
[add your pension provider’s full
postal address here]
Dear Sir or Madam
Re. Pension plan number [add the plan details here]
I am in the process of separation from my [husband/wife/civil partner]. I enclose my Form P. I would be grateful if this could be completed and returned to me as soon as possible with the following:
I look forward to hearing from you and thank you for your assistance.
[add your name]
A sample of a letter to send to your ex if they are not responding to you about sorting out finances
[add the date here]
Dear [add in name of your ex]
I have tried to make contact with you several times [give details, such as by email on x date, by phone, by text], but you have not replied.
We need to find a way of sorting out our finances. This is part of the divorce process. I would like to try mediation but you have not replied to the mediation service about going to a meeting with them.
As nothing is moving forward at the moment I cannot see what to do other than to ask a solicitor to get in touch with you. I would have liked to work this out between us really but that doesn’t seem to be happening.
If I don’t hear from you by phone, text or email in the next week, I plan to go and see a solicitor.
Sample letter - to your ex if they have refused to communicate, go to mediation and have ignored a letter from a lawyer
[add the date here]
Dear [add in name of your ex]
I have tried to come to an agreement with you about our finances in different ways:
The solicitor explained that the divorce can go through without us sorting out the finances at the same time but everything around the house, the pensions and the outstanding debts will still be there hanging over us. I want this all sorted out so that when we divorce we can really go our separate ways. I would like to avoid any possible financial mess.
The only way now that I can see to move things along is by going to court. I really don’t want to do this but I cannot see another way to sort things out properly - [for us and the kids - if you have children].
If I don’t hear from you in a week I will make an application to the court so a judge can help us to work through the process and get this all sorted out. You will get the information in the post from the court.
The information in this guide applies to the law in England and Wales only. The information in this guide is correct at the date of publication. The law is complicated and does change. We have simplified things in this guide. Please don’t rely on this guide as a complete statement of the law. We recommend you try and get advice from the sources we have suggested.
The cases we refer to are not always real but show a typical situation. We have included them to help you think about how to deal with your own situation.
The Nuffield Foundation is an independent charitable trust with a mission to improve social well-being. The Nuffield Foundation has funded this project but the views are those of Advicenow and not those of the Nuffield Foundation.
Advicenow would like to thank the Family Justice Council for their involvement and support in the production of this guide. Advicenow would like to thank all those who provided advice and feedback on this guide, particularly members and associates of the Pension Advisory Group including Paul Cobley, Rhys Taylor and Hilary Woodward.
This guide is endorsed by the President of the Family Division, Sir Andrew McFarlane, and by the Family Justice Council.
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