Divorce, separation and dissolution

Break-ups are never easy. Here is some essential information that will help you understand how a divorce, judicial separation or dissolution of civil partnership may affect your pension.

If you divorce, a court may decide that some or all of your benefits should be shared with your ex as part of the divorce settlement. In the ROI, this is also true where a dissolution of civil partnership or a judicial separation is granted by a court.

In the UK, generally a court will split your benefits between you and your ex (or, the court could decide to ‘earmark’ a percentage of your benefits to be paid to your ex when you retire or die, but this is less common). In the ROI, a judge will have considerable discretion to ensure proper provision is made for each of the parties at the date of the divorce or dissolution and may look to divide your pension benefits.

To divide up your benefits, they would need to be valued, and the court-decided percentage/value would either be transferred out of your pension scheme to an approved pension arrangement for your ex or otherwise paid out of the pension scheme to them. Your own benefits will reduce accordingly.

In the UK and the Isle of Man, this is known as a ‘pension sharing order’. In Ireland, it’s called a ‘pension adjustment order’.

Note: Pension sharing is not available in all jurisdictions. You should take advice on how best to take account of your pension benefits in a divorce, separation or dissolution.

A step-by-step guide to managing your benefits in a divorce, separation or dissolution

Here’s an idea of the typical steps that need to be taken – you can also see what you’d need to provide, and when and how to provide them. All times are approximate.

  • Actions for you / your ex
  • Actions for us, the administrator

See timeline for the process for Offshore pension schemes

Note: The process will depend on your pension scheme and the jurisdiction you live in.

  1. Get in touch with the admin team

    • Review your court letters and details on sharing your pension with your ex.
    • Check your court letters for specific details on what you need to ask for.
  2. We will send you an information pack

    After 5 to 10 working days, we will send you a pack including:

    • An information form for your ex to return to us; and
    • A transfer value of your ex’s ‘share’ of your benefits.

    This transfer value is illustrative only and not guaranteed. We will calculate it again if you proceed with a pension sharing order.

  3. Send your court documents

    If you receive a pension sharing order/arrangement, please send us (via post):

    • Decree Absolute
    • Pension sharing order; and
    • Pension Sharing Annex.
  4. We’ll send transfer out request forms to your ex

    Your ex should receive these within 5 to 10 working days.

  5. Your ex needs to complete the transfer out request forms

    Your ex, with the receiving scheme, needs to complete the transfer out request forms and send them, by post, to us.

  6. We’ll complete the pension sharing order

    Once we receive all the completed forms, we will recalculate the transfer value and complete the pension sharing order.

See timeline for the process for Irish pension schemes

  1. Speak to your solicitor

    Your solicitor will prepare a draft pension adjustment order and send it to us.

  2. We will review the pension adjustment order

    • We will liaise directly with your solicitor to make any changes.
    • Once finalised, we will sign it off ready for court.
  3. The pension adjustment order goes to court

    Once implemented, it will be sent to us to put on your file.

  4. We’ll confirm the details to you

    • We will send you confirmation of the percentage/value split and dates, where applicable.
    • We will also send confirmation to your ex, explaining their benefits.
    • Copies are also sent to your solicitor.
  5. Take your benefits

    • When you’re ready to take your benefits, we’ll send you a quotation.
    • The benefits you’ll get will be the percentage/value set out in the pension adjustment order.
How long will it take?

For qualifying members of Offshore schemes, the pension sharing order will be completed no longer than 4 months after receiving all forms from your ex as well as the receiving scheme. But it may take longer if the paperwork is not correct and/or in the format required.

For members of Irish schemes, the time it takes to complete the pension adjustment order will be determined by your solicitor.

Facing redundancy

If you are being made redundant, there are 3 things you should know about your benefits:

  1. You may be able to pay some of your redundancy payout into your pension if you’re a member of an Offshore scheme (this is not permitted in Ireland). This might be a tax-efficient way to boost your retirement income, but you’ll need to keep an eye on the Government limits on how much you can contribute and save without paying tax. This option may not always be available to you, and you should ask the administrator for further information if you are considering this option.

  2. You may be able to take your benefits straight away. Some members may receive their benefits without reduction for early payment. You would need to check your terms of redundancy to know if this applies to you.

  3. Get advice. It’s always a good idea to get advice if you are considering either of these options, to check that they are right for you.

Ill health

If you’ve been off work for a long time because of ill health, or you’re getting long-term disability payments that have run out, you may be able to take your benefits earlier than your normal retirement age, without a reduction. This will depend on the rules that apply to you and in some cases the consent of the bank or the Trustee.

Usually, if you take your benefits earlier than your scheme’s normal retirement age, how much you receive every year is reduced, because they will likely be paid for longer. How much you will receive in the case of ill health will depend on your circumstances. In this way, your pension might not be reduced in the same way as it would be if you were in good health.