What will happen to my Private Pension if I get divorced?

In recent years the media has been relentless in sending the message that those without their own private pension risk economic catastrophe in their later years as the state pension may eventually be phased out entirely! The message has, in many cases, been heard by the public and, increasingly, in divorce cases, one, or both, of the two spouses, have pension funds, sometimes of considerable value.

In some cases, only one spouse will have accumulated a significant “pension pot”. Its value may be anything between £100,000 or may even exceed £1 million.

The law has therefore developed to empower a divorce court, distributing financial assets between divorcing spouses, to treat pensions like any other marital asset, meaning the pension can be divided between the parties when they divorce.

Accordingly, for example, where Mr B has a BP private pension worth £470,000 and is divorcing his wife, Mrs C, who has a very modest private pension fund of £18,000, the total pension assets will amount to £488,000. Dependent on the circumstances, Mrs C may seek an equal division of all the £488,000 pension assets. If the court agrees, it has the power to make a Pension Sharing Order which will sever a percentage of Mr B’s BP pension (for example 50%), so that it can be placed it in an entirely separate, new, pension in the wife’s name. Mrs C can then increase its value in the long term, should she so wish, by making contributions to the fund like any other pension.

It is also important to remember that a court can, in fact, make a Pension Sharing Order in, say, our example, whereby Mrs C receives 100% (all of) of Mr B’s BP pension, perhaps where he has other pensions he can live on.

Pensions accordingly have the twin characteristics of being;

• a deferred benefit, inaccessible immediately, unless the parties are of a certain age (usually no earlier than age 55); and
• an asset within the courts’ divorce jurisdiction at the time of the divorce and liable to be divided in any way to meet the needs of the parties, despite its future, as opposed to present, financial promise.

If you are about to go through a divorce, or, if you are currently involved in one, we can help you realise your share of any pension assets. Healdlaw Ltd have a family law department with solicitors who are experienced practitioners in this field.

Please call 01908 662277 to speak to our family law team who can assist you with advice on any aspect of family law.