Divorce and your pension – what you need to know

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You spend years building up your pension savings, meaning they can end up being one of the biggest assets involved in a divorce. That’s why it’s important to understand how they might be impacted.

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When you get a divorce, the court will include any pension plans as part of the total assets to be divided between you and your ex. 

How much of your pension savings are included in this will depend on where you live in the UK. For example, if you live in Scotland, they’ll only count the value of any pension savings built up during your marriage. In other parts of the UK, they’ll normally count the total value of your pension savings at the date of your divorce.

The court will then decide how to split any pension savings in the fairest way between you and your ex. 

How can a pension be split up in a divorce?

There are three ways a pension plan could be split up: 

1. Pension offsetting

This is where the value of your pension is compared against any other assets you have – like your house or savings. From there, it’s a bit of a trade-off to make sure both you and your ex get a fair deal. So, for example, you may be able to keep all of your pension in exchange for your ex getting a larger portion of the house value.

2. Attachment order or ‘earmarking’

This is where one person agrees to pay the other some of their pension income when they start to take it themselves. It means the person without the pension can get income and/or a lump sum from the other’s pension in the future.

If you’re the one without the pension, there are a few downsides to this option. The original pension owner is still in control of it, so they can make a lot of decisions without you – like what to invest in or when to start taking the money.

3. Pension sharing

This option splits the pension at the time of the divorce. Some or all of one person’s pension is transferred into a new or existing pension belonging to the other person.

This is often the preferred choice because it gives both people total control over their pension savings and offers them a clean break.

State Pensions and divorce

The new State Pension can’t be shared if you divorce. However, if you have any additional State Pension – which is a payment you might get on top of your State Pension if you’re eligible – the court can decide to share that between the two of you.

It may also be possible for one person to use the other’s National Insurance contributions to boost their own State Pension, as long as they don’t remarry or enter a civil partnership before they reach State Pension age.

Last but not least – check who you're leaving your pension to

After a divorce, you might want to make some changes to who will inherit your money when you die. Remember, your pension savings aren’t included in your will. Your pension provider usually decides who your pension will go to, and the beneficiaries listed on your plan will play a big part in that decision. So it’s important to update the beneficiaries on your plan after a divorce if your wishes have changed.

If you’re a Standard Life customer, you can do this easily online or by getting in touch with us.

Need some help?

Going through a divorce is an emotional time and the last thing you need is to have money worries on top of that. That’s why it’s well worth speaking to an expert if you need help. If you want to talk through your options, it’s best to speak to your financial adviser if you have one. Or, MoneyHelper offer free appointments to discuss your pension in a divorce.  

The information here is based on our understanding in January 2024 and shouldn’t be taken as financial advice.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.