I AM L.I.P

I AM L.I.P

I am a Litigant In Person

Dividing Pensions And Pension Sharing Orders

 

This guide has been written in a simple manner to give you a general understanding so that when you talk to your ex-partner/solicitor/pension provider/the family courts, you have a grounding of what you are talking about. 

WHAT IS A PENSION?

A pension is a fund you pay into that helps you save money for your retirement so you have something to live on when you are not earning. There are two types of pension – a state pension, made up of national insurance contributions, and a private pension, either set up by yourself or your workplace made up of your private contributions. A person can have more than one private pension.

IS A PENSION A MARITAL ASSET?

Yes, in the UK pensions are considered a marital asset and part of the matrimonial pot. This was introduced in the UK in 2000.

HOW IS A PENSION SPLIT DURING A DIVORCE?

There are 3 ways a pension can be divided between you and your ex-partner as part of a divorce. Usually, the pension is split in half between both parties.

  • Pension sharing – Splitting of a pension in a divorce is called pension sharing. The general rule of thumb is to divide the pension benefits earned during the marriage in half, but a judge can alter this when they take into account other factors such as, age and earning capacity to acquire another pension. The court will try to make sure both ex-partners have an equal income in retirement.
  • Earmarking – Earmarking is when there is no legal transfer of the pension. When one partner starts to draw pension benefits, their ex-partner will be paid at the same time.
  • Offsetting – This is when the value of the pension is off-set against other assets – one partner can have their entire pension, and their ex-partner is awarded alternative assets (such as property or cash) of the same value. 

The amount of the pension the court will award to the receiving ex-partner is called a pension credit. The amount deducted from the existing pension is called a pension debt.

CAN THE PENSION BE TRANSFERRED TO YOUR OWN NAME?

Yes it can, so you can do whatever you want with your pension and if your ex-partner dies, it doesn’t effect your pension. It can also be moved to a new provider – called external transfer – if you wish, or stay with the existing one – called an internal transfer.

DO YOU LOSE YOUR EX-PARTNER’S PENSION IF YOU REMARRY?

No, you do not.

WHAT IS A PENSION SHARING ORDER (PSO)?

This is a court order detailing how a pension is to be divided between both ex-partners. Pension schemes and companies are not able to divide or transfer anybody’s pension benefits unless there is a pension sharing court order to do so. 

WHAT IS PENSION PROTECTION FUND (PPF)?

In simple terms, a pension protection fund is a statutory government fund that protects pension holders in case anything happens to their pension provider or their employer from whom they took out a pension. If anything happens then this fund will give compensation to the pension holder, if they are a member. This compensation can also be split in a divorce. 

WHAT IS A PENSION COMPENSATION ORDER?

A pension compensation order is when a court orders for PPF compensation (explained above) to be divided between both ex-partners. The amount of the pension compensation the court will award to the receiving ex-partner is called a pension compensation credit. The amount deducted from the existing pension compensation is called a pension compensation debt. The receiving ex-partner will then become a PPF member with their own entitlement to compensation when they retire.

HOW DO YOU GET VALUATONS OF YOUR STATE AND PRIVATE PENSIONS FOR DIVORCE PURPOSES?

STATE PENSION – The court dealing with the division of your pension for divorce purposes will require a valuation of yours, your ex-partners or both of your state pensions. You can do this by completing a government form BR20NSP. You can download this form from a government website. Please click on the link below

LINK TO OUR L.I.P HELP GUIDE FOR FORM BR20NSP

Both you and your ex-partner need to complete a your own separate copy of form BR20NSP and send it to the department of work and pensions. Once they receive your form they will work out what your pensions is worth. This is called the cash equivalent value. They will then send you a valuation letter stating your cash equivalent value.

The address you need to send your completed form to is – The pension service 9, Mail handling site A, Wolverhampton, WV98 1LU. Their telephone number if you need help is 0800 731 0175.

PRIVATE PENSION – The court will also require a cash equivalent valuation of yours, your ex-partners or both of your private pensions. You can get this valuation from your annual pension statements. You must forward your latest annual pension statement to the court and if you do not have one please contact your provider and ask for one. Please talk to your provider that you need a statement for divorce purposes and they will forward you the right paperwork.