Pension entitlement and marriage
Following a marriage or civil partnership, assets and finances might be affected. Marriages function much like a contract, providing financial protection for both spouses. If you separate or your spouse passes away then you may receive some of their retirement funds.
Pensions and prenuptial agreements
Prenuptial agreements (commonly known as prenups) are legal documents signed before marriage or civil partnership. These documents decide how assets will be divided in case of a divorce or dissolution of a civil partnership. This can potentially protect your pension.
Pensions and wills
Wills are legal documents that represent your wishes for your assets after death. Commonly, they will list the assets (property and any investments for instance) and the beneficiaries (those receiving these assets). A pension isn’t legally part of someone’s estate, so isn’t covered by your will. Many pension schemes will ask you to nominate the beneficiaries for your pension.
Pension entitlement and divorce
Assets could be divided during a divorce or dissolution of a civil partnership. Pensions are often a valuable investment and may be split between spouses. This depends on whether the court issues a Pension Sharing Order (PSO).
Pension earned before marriage is usually exempt from Pension Sharing Orders. However, some calculations may count from when you began cohabiting.
Pension earned after marriage is always taken into account when calculating your Pension Sharing Orders. Longer marriages may even count premarital pension contributions too.
Sharing a percentage of your pension
If your marriage or civil partnership spans a shorter period you may receive a Pension Sharing Order calculated on a percentage of your pension.
Example: you’re required to share 50% of your pension accrued during the relationship. Currently your defined contribution pension is £30,000 and £10,000 of its value was accrued during the relationship. Following the Pension Sharing Order you’d give £5,000 and your order would need to specify 12.5% to be shared, unless in Scotland where Pension Sharing Orders can be expressed as a figure.
Sharing your whole pension
If your marriage or civil partnership spans a longer period you may receive a Pension Sharing Order calculated on your whole pension.
Example: you’re required to share 25% of all your pensionable benefits. Currently your defined benefit and defined contribution pensions have a combined value of £300,000. Following the Pension Sharing Order you’d give £75,000.
Please note: It’s important to bear in mind the value of your pension may go up or down during the course of your divorce negotiations, and in the lead up to the order being implemented once the order has been granted. This can impact on the final value transferred.
State Pension entitlement and marriage
When you’re married or in a civil partnership you may become eligible to inherit your partner’s State Pension benefits if they pass away - and vice versa - depending on whether your marriage or civil partnership began before or after 6 April 2016.
For marriages and civil partnerships made before 6 April 2016 you could receive:
- Additional State Pension, if your partner had passed away or reached State Pension age before 6 April 2016.
- Half of their protected payment, if your partner had passed away or reached State Pension Age after 6 April 2016.
Both benefits will be paid alongside your State Pension after you reach State Pension age.
Your State Pension if you remarry
If you’re eligible for one of the above benefits it’s important to consider whether you’ll remarry. The process of remarrying or entering another civil partnership - before you’ve reached State Pension age - will disqualify you from any State Pension inheritance due.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 30-05-2024
