After your family home, your pension can be your biggest financial asset, especially if you are nearing retirement. Your pension benefits are now taken into account in divorce settlements and it can be a complex area. We have outlined below the three main options the courts offer, but we recommend that you take professional advice.
The courts will ‘earmark’ all or part of your pension (income and any lump sum) to be paid to your ex-spouse. These payments will start at the same time as you receive your pension. Payments will stop being paid to your ex-spouse when you die or if they re-marry.
The value of your pension can be ‘offset’ against other assets. For example, you may decide to keep your pension benefits in return for giving your ex-spouse a bigger share of the family home. You can only use this option if there are sufficient assets to offset your pension benefits against.
With pension sharing, the Cash Equivalent Transfer Value (CETV) of the member's pension rights is split between both parties. The courts will decide the split. You will receive a reduced pension and provide your ex-spouse with a sum of money which they can add to their existing pension or, if they don’t have one, they will have to set up a new pension arrangement.
Pension sharing applies to all of your pension benefits – those with IBM, as well as any other schemes you have – but excludes the Basic State Pension.
Please refer to our Divorce Factsheet for further information.