Pensions and divorce
If you’re not married or in a civil partnership, your pension can’t be divided when your relationship ends. If you’re married, your options will vary depending on whether you’re in the processes of separation and divorce. Separation pension spouse rights mean that you may be able to start claiming benefits from your partner when separated, however you need to be getting a divorce before you can explore divorce entitlements such as a financial settlement.
Usually when you get divorced or dissolve a civil partnership, you have to declare all of your assets so that they can be valued and split. The combined pensions of you and your partner can be one of the most significant assets you’ll need to assess and should be included in your financial settlement.
You’ll need to find out the total value of all of your pensions, including any workplace or personal pension schemes you are a member of. Your State Pension may also need to be considered depending on your circumstances and whether you reached State Pension age before or after 6 April 2016. You can find out more information on how this may be affected by divorce on the gov.uk website.
Ways to split your pension
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, which includes any 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 counted. This means that anything you both saved early on in your careers before you met or after you separated is excluded.
There are five main options to split a divorce pension.
- Pension sharing order (PSO): a pension sharing 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.
- 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.
- 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 their pension.
- 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.
- 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.
Timeframes for splitting a pension after divorce
Once you’ve reached a divorce settlement with your former partner you should instruct your solicitor to draw up a ‘consent’ or court order which will turn your financial settlement into a legally binding agreement. As soon as this is approved by the court it is final, and neither party will be able to make any additional claims for money in the future.
Where a financial settlement has not been formally agreed and there is no consent order, both parties can exert their divorce pension rights and make a claim on the other’s finances, regardless of how long they have been divorced. There’s no time limit to this and a claim can be brought at any time until a consent order is put in place. While a consent order isn’t mandatory, it’s a good example of how to protect your pension in divorce.
Can I split my pension with PensionBee?
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, known as a Pension Sharing Order (PSO), 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 on our Plans page.
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) including 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
- 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 just 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 fees on our Fees page.
How do I withdraw from my PensionBee pension when I retire?
When you reach the age of 55, you’ll have the option of taking out up to 25% of your PensionBee pension as a tax-free lump sum.
When you retire, you’ll be able to choose between four options:
- Take out a lump sum and leave the rest invested
- Drawdown smaller amounts on a regular basis
- Purchase an annuity for guaranteed lifelong income
- Leave your pension alone, so it can remain invested
All this can be done easily from your BeeHive, online or using the PensionBee app.
Learn more about accessing your pension on our Pension withdrawal page.
Can I talk to someone?
If you have a question that isn’t answered here or in our FAQ, you can contact us by phone (020 3457 8444), email ([email protected]) or live chat (click the chat box to the bottom right of this page).
Once you’ve signed up to PensionBee, you’ll be assigned your own personal account manager. We call them BeeKeepers, and they’re on call to answer any questions you might have. They’ll also provide you with updates as your pension transfer progresses.
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: 07-07-2021