Separation and divorce

Divorce is never easy, but it can be especially complicated when it comes to pensions. Pensions are often one of the most valuable assets in a marriage, and they need to be divided fairly and legally when a couple splits up. Here are some of the main issues to consider when dealing with pensions in a divorce.

What are the options for dividing pensions in a divorce?

Where you live in the UK will have an impact on how your pensions can be divided. In England, Wales, and Northern Ireland the total value of both pensions will be taken into consideration. This includes amounts you both saved before marriage.

Pension splitting in divorce works slightly differently in Scotland as only the pension amounts saved during your marriage are considered. This means that anything you saved early on in your careers, before you met, or after you separated is excluded.

There are five main options to split a pension in divorce.

  1. Pension Sharing Order (PSO): a Pension Sharing Order on divorce lets you take a percentage share of your former partner’s pension pot straightaway. It provides a clean break and you can either join their pension scheme or transfer your money to a scheme in your name.

  2. Pension Offsetting: Pension Offsetting is when you use the value of your pension to offset other assets, such as property. It could allow you to keep your pension, for example, while your former partner is awarded a larger share of another asset such as your shared home.

  3. Pensions Attachment Order: a Pensions Attachment Order (or ‘Pension Earmarking’ in Scotland), is when some of your pension is paid to your former partner, usually when you start to withdraw it. Unlike some of the other options, this doesn’t provide a clean break as one partner is reliant on the other to begin drawing down their pension.

  4. Deferred lump sum: a deferred lump sum is similar to a Pension Attachment Order and enables you to receive a lump sum when your former partner retires. It’s not available in Scotland but can be used anywhere else you divorce in the UK.

  5. Deferred Pension Sharing: if there’s an age gap between you and your former partner, and they are already drawing a pension, you can apply for a deferred Pension Sharing Order which allows the younger party to delay taking their pension entitlement until they reach pension age. This option isn’t available in Scotland either.

In situations where both you and your former partner have retired, pensions can still be split, however it won’t be possible to take a share as a lump sum.

How to choose the best option for dividing pensions in a divorce

Here are some of the factors that Family Court will consider when dividing pension savings between spouses in a divorce:

  • length of the marriage;
  • age of each spouse;
  • type of pension schemes involved;
  • other assets and liabilities of each spouse; and
  • financial needs of each spouse.

In general, the aim is to achieve a fair settlement for both spouses, taking into account all of these factors.

How can PensionBee help with pensions in a divorce?

With PensionBee, you can send and receive a split pension as part of a divorce settlement if you live in England, Wales or Northern Ireland. We’re currently unable to receive Scottish split pensions with Earmarking Orders attached.

Transferring a split pension to PensionBee

If you choose to transfer your percentage of your ex-partner’s pension, you can have it transferred to a PensionBee account. We’ll ask you to provide several documents (see below) before accepting the transfer.

If you don’t already have a PensionBee account, you can sign up for one here. Usually, you’d need to transfer an old personal or workplace pension to join PensionBee. But this isn’t necessary when receiving a split pension.

PensionBee offers a range of personal pension plans that you can transfer your split pension into, including options for those nearing retirement and those wanting to invest sustainably. We don’t offer self-invested personal pensions (SIPPs).

Find out more about our pension plans.

Transferring a split pension from PensionBee

If part of your existing PensionBee pension is due to be split as part of a divorce settlement, we’ll ask you to provide several certified documents (see below). This includes a transfer request from the receiving pension provider.

Which documents will I need to provide?

Whether you’re receiving or transferring a split pension with PensionBee, you’ll need to provide the following documents, certified by an authorised person (for example, your solicitor):

  • Pension Sharing Order;
  • Consent Order; and
  • Decree Absolute.

These will all need to be completed, highlighting PensionBee as the provider responsible for transferring the split pension.

They’ll also need to be certified by an authorised person (preferably the solicitor dealing with the divorce). The authorised person will need to annotate each copy with their name, date, signature and address.

We’ll send copies of the Pension Sharing Order to the other pension provider if requesting funds, and they’ll need to confirm how they’d like to receive your transfer funds.

Does it cost anything to send or receive a split payment with PensionBee?

No, sending or receiving a Pension Sharing Order payment’s free with PensionBee. In some cases, there may be additional charges. For example, if you were to withdraw 100% of your pension within a year of transferring it to PensionBee.

PensionBee offers a range of pension plans and charges one fair annual fee to look after them. This is between 0.50% and 0.95% depending on your plan, with 50% off the portion of savings over £100,000.

Find out more about our pension fees.

Learn more on The Pension Confident Podcast

Wondering how your relationship impacts your personal finances? Listen to episode 14 of The Pension Confident Podcast and hear from our guests as they discuss cohabitation, common law marriage, divorce and more. You can also watch the episode on YouTube or read the full transcript.

If you’re interested in learning more about looking after family members, what to do when expecting a baby, or family problems like illness, divorce or bereavement, head to our Family and Care section.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 06-04-2024

Ready to consolidate your pensions?

Get started in minutes. Why not take a look now and see how easy it could be to take control of your pensions?

Get started now

Mobile PensionBee analytics chart
Mobile PensionBee analytics chart
Apple Store logo Google Store logo

Have a question?Call our UK team020 3457 8444

Monday-Friday: 9:30am-5pm