‘Is my ex entitled to my pension?’ is one of the most frequently asked questions on our divorce and family law helpline.
Slee Blackwell Solicitors are independently ranked among the top five divorce solicitors in the UK*. For expert guidance on ‘Is my ex entitled to my pension?’ call us for a free initial consultation by calling 0333 888 0404 or emailing us at [email protected].
When a married couple separates, the treatment of their pensions can often be a little contentious. This is because pensions are treated as a marital asset – even where the pension is accrued before the marriage.
The division of pensions on divorce is commonly calculated on a ‘needs’ basis. This is the case even where assets are in the low millions.
In a needs-based case, the courts can call upon any asset to meet the needs of the parties ,and this includes assets accrued outside of the marriage, such as pensions.
Providing a CETV
As most people have changed their employer during their careers, it is likely that the parties will each have multiple workplace pensions from their different jobs.
There are services available that can consolidate all of your pensions into one, and there is also a government service to assist in finding your pension contact details: https://www.gov.uk/find-pension-contact-details
You will need to provide a CEV/CETV (Cash Equivalent (Transfer) Value) for every pension that you have. The CETV shows the cash value of your pension at the date you request the CETV.
It is important to note that some companies will charge a fee to produce a CETV and that some pension providers have a long wait time on CETV’s, which are typically the pensions provided from civil and public service jobs, such as teachers, NHS, police and armed forces.
If your pension is already in payment, the CETV value will reduce each month, so it is important to also provide a P60 for your pensions if they are already in payment.
Tracing Your Pension
If your pension is in payment and you have drawn down on that pension, whether that be the tax-free allowance or an additional lump sum, you will also need to be able to evidence this drawn down and where the money now is.
If you have moved money between pensions, you will also need to be able to evidence this. Either by transaction reports from the pension providers that show this, or letters from the pension providers.
Tracing pensions can be a slow process if you are not aware of the pensions you have previously had. The best place to start is to contact your previous employers to find out who the pension provider for when you were employed was and if they have an account number.
If you do not know account number, you will need to contact the pension provider to obtain this information. Most providers will need your full name, date of birth, National Insurance number and your address for the time you were paying into the pension.
This is something that we can assist you with as we can liaise with the pension providers on your behalf.
PAG 2
During the financial settlement stage of a divorce, if you have a pension you may hear the term ‘PAG 2’ being used. This refers to the second report of the Pension Advisory Group and sets out on how pensions are to be treated during divorce.
The starting point for division of assets in a marriage is 50/50. However, this is just a starting point. Essentially, the longer the duration of the marriage, the less likely there will be a good reason to depart from an equal, 50/50 division of pension assets.
Even where pre-marital accrual makes up the majority of the pension, if the case is needs-based then the whole of the pension can still be used to meet the needs of the parties.
A potential problem arises when the marriage is of short or medium length, as a 50/50 split is not necessarily appropriate. It is important to note the courts consider continuous cohabitation to be included when identifying the length of the marriage.
Prior to the PAG 2 report, there was no guidance on pensions in short marriages. However, section 4.11 of PAG 2 details that the marital element of the pension should be shared equally. The section also explains that in needs-based cases, the date the pension was accrued is not necessarily relevant but the court will consider the length of the marriage when determining the needs of the claiming party on the pre-marital portion of the pension.
For example, if during a short marriage one of the parties was unable to contribute to their own pension, then dipping into the other party’s pension that was accrued before the marriage may be appropriate
Pension Reports
During contested financial proceedings on divorce, a specialist pension report may be required. These reports are completed by a ‘Pensions on Divorce Expert’ and are sometimes referred to as PODE reports.
These reports are necessary in some cases to ascertain how much of the pension was accrued during the marriage, and will also give a breakdown on the percentages required in a pension share to equalise the parties income upon retirement.
In shorter marriages, it is important to understand what was accrued before and during the marriage, as simply dividing the marital accrual is not always sufficient to meet the parties needs. Having these figures can assist during negotiations as the parties may wish to capitalise the pension which a PODE can advise upon.
In some cases pension reports are not required if the parties are in agreement about the pensions, or the pensions are not complex. However, PAG 2 sets out a list of criteria when a PODE report maybe or may not be required as division of the CETV is not sufficient.
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The Cost of Pension Reports
The cost of the pension report is determined by:
- How many pensions there are
- The complexity of the pensions
- How many accrual periods need to be considered
- If state pension needs to be considered.
The cost of the pension reports are usually divided equally between the parties.
The average cost of a pension report is between £2,500 – £4,000, depending on the above criteria. The more analysis a PODE needs to do, the more their reports cost.
How We Can Help with Dealing with Pensions on Divorce
If you require further guidance on the question, ‘Is my ex entitled to my pension?’ or you are looking for solicitors to advise you on your best options, then our family law team is here to help.
We offer a free initial consultation and are happy to assist with as much, or as little, as you need, and provide you with all the relevant advice and guidance required.
