How pensions are assessed during a separation, divorce and dissolution
When you end your marriage (or civil partnership or cohabitation) by judicial separation, divorce or dissolution, the court can decide to share your assets with your former partner or any dependent children. This is to make sure that each person is provided for.
While the family home is usually the most valuable asset, your pension can also be considered an asset. This means the court can order that your pension be divided into whatever shares it considers appropriate. This is called a pension adjustment order.
Pension adjustment order
A pension adjustment order is when the court orders your pension be shared with your former spouse or civil partner, and (or) any dependents, such as children under 18.
For example, if one person has a substantial pension, and the other person who worked in the home has no pension, the court can order that part of the pension be paid to the other person (or to a dependent child).
The court can also order that part of the pension fund is split and placed into another pension fund in the name of the other spouse or civil partner.
If there are multiple private pension arrangements, the court will make separate pension adjustment orders, as required.
Pension adjustment orders can also apply to cohabitants, but the rules are slightly different – see ‘If you lived together but were not married or in a civil partnership’ below.
The law on pension adjustment orders is set out in the:
If you lived together but were not married or in a civil partnership
A court can make a pension adjustment order if a cohabitation ends (this means a cohabiting couple are no longer in a relationship). However, unlike in the case of separation, divorce or dissolution, the pension adjustment order can only be made in respect of the cohabitant, not any dependent children.
A cohabiting couple is a couple that lives together in an intimate and committed relationship, who are not married to each other and not in a civil partnership. Cohabiting couples have certain rights in relation to property, custody of children, maintenance and inheritance. To qualify for these rights, you must have been cohabiting for at least 5 years (or 2 years if you have dependent children together).
Cohabiting couples can be opposite-sex or same-sex. A cohabiting relationship can continue to be ‘intimate’ even if it is not sexual.
Factors the court will consider
Before a court grants a judicial separation, divorce or dissolution, each spouse (or civil partner or cohabitant) should have fully revealed all of the financial resources to the other person. This includes full details of any pension.
The court will consider all of the financial resources available to each person before it makes a pension adjustment order.
Even if the court does not make a pension adjustment order, it may take the value of the pension into account when making other financial orders.
If one person refuses to disclose the details of their pension, the other person can get this information directly from the trustees of the pension scheme. This is set out in the Pensions Act 1990.
After the order is granted
When a pension adjustment order is granted by a court, it is served on the trustees of the spouse's pension scheme. The trustees will then make the necessary adjustments to the provisions of the scheme.
Pension schemes are administered by trustees who must follow the terms set out in the trust deed and rules. The trustees cannot change the terms of the trust and make provision for a person who is outside the scope of the scheme, even if the member requests them to do so.
For example, the terms of a trust could make provision for a member's spouse (such as a survivor's pension), and this will be payable to the member's lawful spouse, even though the member may have been separated for many years and have a new partner.
The terms in a separation agreement in relation to pensions may not be enforceable against the trustees or legally binding.
Pensions are particularly complex, so you should seek specialist advice in relation to the value of a pension. Find more information on pensions.
How to apply for a pension adjustment order
The court can make a pension adjustment order when it is granting a decree of judicial separation, divorce or dissolution.
Alternatively, either spouse can apply to the court for a pension adjustment order after the decree of judicial separation, divorce or dissolution has been granted.
The Pensions Authority is responsible for regulating pension schemes. You can visit their website for information on how pensions may be affected by separation or divorce.