If you’re not married or in a civil partnership, and separate from your partner

If you and your spouse have been unable to maintain your relationship and are considering a formal separation, there are numerous considerations. Choosing to end a relationship that has lasted many years, in some cases, can be a very trying and emotional experience. Among the numerous issues that will need to be addressed is how your pension entitlement is handled and organised following the end of your relationship with your spouse.

How can pension arrangements be organised in a divorce?

Surprisingly, pension entitlements are sometimes overlooked when individuals seek to divorce one another. This can be for a variety of reasons, the primary one being that there are oftentimes considerably more emotionally charged issues to be agreed upon and resolved, such as child care or financial assistance. Having said that, pensions are critical and should receive some consideration when a spouse decides to divorce.

Technically, only the courts have the authority to decide on pension entitlements during a divorce. If you and your spouse, whether married or in a civil partnership, wish to separate your separate pension arrangements, you must apply to the courts for a Pension Sharing Order.

What is a Pension Sharing Order?

A Pension Sharing Order is a court-issued directive governing you and your former partner’s pension rights. More precisely, it provides for the distribution of a percentage of your former partner’s pension fund to you. The money that you ultimately get as part of a Pension Sharing Order will be legally treated as your money, despite the fact that it originates from your partner’s pension assets. The same is true for your former spouse – the order will specify the portion of your pension to which they are entitled.

In fact, a Pension Sharing Order should always be incorporated into a larger financial settlement between the parties. Even if you and your partner are able to reach an amicable agreement on the terms of your divorce, it is critical that you obtain a Pension Sharing Order from the court to give legal effect to your decision for one another. Another critical point to emphasise is that Pension Sharing Orders are available only to couples who have been married or in a civil partnership – if you have been living together as a ‘cohabiting’ couple, as man and wife, you will be unable to divide your pension claim.

Pension Sharing Orders are generally reflective of the concept that couples share resources over the length of a marriage or civil partnership. Pension Sharing Orders are based on the premise that a fair distribution of pension contributions between parties is necessary to do justice to each of them.

How much money will you get?

The procedure for calculating the value of your pension entitlement is fairly complicated. As previously stated, a Pension Sharing Order will specify the portion of your former spouse’s pension to which you are entitled. There is, however, a bit more to this than meets the eye.

Your pension is valued differently depending on where you live in the United Kingdom: the regulations and practises vary between England, Wales, and Scotland. In Scotland, only the value of the pension(s) you and your spouse have accumulated throughout your marriage can be considered; everything prior to entering into a legal partnership together or following the dissolution of your relationship is excluded.

Pension valuations are inherently complicated. However, the fundamental concept to grasp is that pensions are evaluated using their ‘cash equivalent transfer value.’ This is the term used to describe the amount of money that you would receive if you choose to shift your pension elsewhere. Bear in mind that the cash equivalents transfer value of your pension may be less than (different from) the fund value of your pension. This is partly because there will be charges associated with the transfer of a pension, such as an administrative charge, which must be factored into the valuation of your pension.

Another critical element to remember when estimating the amount of money you can receive as part of a Pension Sharing Order is the date of the appraisal. In Scotland, unlike in England and Wales, your pension will be evaluated on the ‘date of separation’ and his, as noted previously, will be limited to the amount of your pension collected throughout your marriage/civil partnership. You are not required to attempt to obtain this information on your own. Your pension provider will be able to offer you with an accurate value within the specified timeframes.

What happens when the Order is granted?

When the Order is granted, the pension entitlement owed to you and your former spouse, referred to as the ‘pension credit,’ can be transferred to a pension system that accepts transfers. This is primarily an administrative role and should not present any significant difficulties.

Pension sharing can be quite complicated, not least because pensions in general and the rules governing their application are complex. Numerous limits apply in the context of pension sharing arrangements, i.e. entitlement to the state pension. Additionally, there are complications associated with pension splitting when a couple retires. If you are divorcing your partner or dissolving a civil partnership and need guidance on pension arrangements, it is critical that you see a specialist divorce lawyer who is familiar with the unique pension regulations that apply in Scotland.

What If you’re not married or in a civil partnership, and separate from your partner?

Neither party is automatically entitled to a share of the other’s pension in this case.
Couples who have cohabited may be described as having a ‘common law marriage’ or as ‘cohabiting’. Numerous couples believe this provides them with the same level of legal protection as a married couple or civil partnership. While this is not true for the majority of the UK, some conditions in Scotland may provide them with the same legal protection.

What Options Do You Have?

If you are married or in a civil partnership and intend to divorce or dissolve your partnership, the court should consider your pension rights.

The value of pensions accrued during the marriage or civil partnership is considered in Scotland. This means that anything acquired prior to the marriage or civil partnership, or acquired after the ‘date of separation,’ is typically disregarded.