Pensions and Divorce
- How long after divorce can you claim a pension?
- Pensions and divorce
- Ways to split your pension
- Pension sharing
- Pension offsetting
- Pension attachment order
- Deferred lump sum
- Deferred pension sharing
- Timeframe for divorce claims
- Pension sharing on divorce
- Splitting a pension when getting a divorce
- Ways of pension sharing on divorce
How long after divorce can you claim a pension?
There is no time limit on when you can claim a pension after a divorce. Each of the parties can claim their ex-partner’s pension without a court order or “consent,” regardless of how long they’ve been separated. Usually, the pension is one segment of the overall financial settlement together with other assets and property.
Pensions and divorce
There is no way for your pension to be split if you are not in a civil partnership or married. For those that have been in a civil partnership or married, their next move will depend on whether they are getting divorced or are separated. You can ask for “separation pension spouse rights” when in the midst of separation. On the other hand, you can ask for divorce entitlements only after getting a divorce.
One needs to declare each asset that may hold a certain value when dissolving a civil partnership or getting separated. Your combined pensions are usually one of the most important assets that will be a big part of your financial settlement.
At that point, it will be important to determine the value of each pension. That will include workplace or personal pensions that you or your partner are involved with. You may need to include the state pension as well. Much of that will depend on whether you’ve reached pension age after or before April 6th, 2016. You can find a more detailed explanation on the matter on the www.gov.uk website.
Ways to split your pension(s)?
Your place of residence in the UK can make a big difference in terms of how your pensions can be split. In Northern Ireland, Wales, and England, the value of the two pensions is to be considered when splitting. Furthermore, the settlement will implement any savings that each of you saved before getting married.
If you reside in Scotland, then only pensions are taken into consideration. In contrast, your savings before meeting each other or after you got separated will not be part of the settlement.
Here are the five most common choices for splitting a pension when divorcing:
Pension sharing
Sharing a pension lets you have a percentage of your former partner’s pension right away. If you come to this agreement, you can choose either joining your ex-partner’s pension scheme or moving the money to your scheme.
Pension offsetting
It means that you get to have your pension all for yourself while your former partner can have a great share of some other common asset. For example, your home, large bank account savings, or some other property.
Pension attachment order
In Scotland, a pension attachment order is known as earmarking, and it happens when a part of the pension is awarded to your former partner. However, unlike some other options, this is not a clear-cut solution as both sides depend on each other to start drawing money from the pension pots.
Deferred lump sum
It means you can get a lump sum once your former partner stops working. Aside from Scotland, it is an option available in other parts of the United Kingdom.
Deferred pension sharing
In case of a considerable age gap between the two parties, and one of the parties is already retired and drawing a pension, it is possible to apply for a Deferred Pension Sharing Order. This will allow you to postpone taking your cut from their pension until you get to retirement age. Again, aside from Scotland, this is available in every other part of the UK.
If both parties are already retired, splitting the pensions is available. However, you can’t take a big chunk of money from the pension pot.
Timeframe for divorce claims
Once you and your former partner find common ground and reach a divorce settlement, you need to tell your attorney to draw up a “consent.” The “consent” will make your settlement legally binding. When the court accepts this settlement, it becomes final. Consequently, none of you can make further money claims in the days ahead.
If both parties find it difficult to agree, there is no time limit to when that needs to happen or when they can exert their divorce pension rights. A claim can be presented to a court at any time after the divorce, irrespective of how long since the divorce has been finalized.
Pension sharing on divorce
When divorced, you usually share all of your common assets with your ex-partner. In some situations, that might include the pension as well. Here is how to split a pension after a divorce:
Splitting a pension when getting a divorce
Unless you have come to a financial agreement or have a prenuptial agreement in place, there is a pretty good chance that you will need to split all of your common assets fairly. The list of common assets can include the family home, other property, savings, and even pensions.
Splitting pensions is a fairly easy operation when divorcing. However, both parties need to declare the full worth of their pensions so that the split can be fair. In some instances, even a state pension can be split.
Those that have reached a state pension age before April 6th, 2016, are drawing what’s known as “basic” state pension. This pension cannot be shared. But, if both of you receive an additional state pension, which comes on top of the basic pension, then the court will order you to share it with your former partner.
Those that have reached a state pension age after April 6th, 2016, will have what is today known as a new state pension. The court can’t order you to share this pension.
Some couples choose not to share their pensions after getting a divorce. Instead, they opt for sharing assets differently. Those that separate from a long-term partner, but were not in a civil partnership or married, might get a part of their assets but can’t ask for a divorce pension.
All in all, regardless of which divorce sharing options you will use, know that nothing is set in stone until you got a court order in hand. Until there is a court order in force, both you and your ex-partner can’t make any claims as you like at any given time.
Ways of pension sharing on divorce
There are a few different ways a couple can share their pensions, however where you live will determine the rules for pensions and divorce the UK. If you live in England, Wales and Northern Ireland the total value of both you and your former partner’s pensions will be taken into consideration. In Scotland there are fewer options available and only the money you each contributed to your pension pot during your marriage can be counted.
Pension attachment order a pension’s attachment order (or ‘pension earmarking’ in Scotland), lets you take some of your former partner’s pension when they reach retirement age and start drawing their pension.
Deferred lump sum (excluding Scotland): A deferred lump sum works like a pension attachment order, but lets you take a lump sum when your former partner starts drawing their pension.
Deferred pension sharing (excluding Scotland): if your former partner is older than you and they are already drawing a pension, you can apply for a Deferred Pension Sharing Order which lets you delay taking a share of their pension until you reach retirement.
Whichever divorce pension sharing option you’re considering for your financial settlement, remember that it won’t be set in stone until a court order finalises it. Before this happens, you and your former partner can make a claim on each other’s pensions at any time.