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What happens to my workplace pension if I get divorced?
Pensions can be, and are, divided when couples divorce. This is a complex area and you will need legal advice if you are involved in a pension split. Basically, pensions can be split in two ways:
- 'Earmarking' is rare but easy to understand. The court will rule that once the pension is paid, part of it will be paid to the ex-spouse. When the member dies, the pension will stop, and if the ex-spouse remarries, they lose their earmarked pension.
- The more common (but more complicated) system is pension splitting, with a specific proportion of the value of your pension at the time of your divorce paid to your ex-spouse. To do this, your pension fund is valued (in the same way as if you were going to transfer it to the pension scheme of a new employer) and a lump sum taken out of your pension and given to your ex-spouse. You will get a smaller pension as a result. In some circumstances, you can then make extra contributions to build its value up again.
It is easier to divide 'money purchase' pensions as you have your own pension pot, which can be split. The courts will not necessarily split your pension. If you are both young and have not built up much of a pension, it may just be ignored. In other cases, it will be taken into account with all your other assets and you may keep your pension but lose property instead. But if you have a reasonable pension, and your ex-spouse doesn't, then you may well have to split it.