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Divorce - Defined Benefit Pension active & deferred member

Hi,

My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?

Comments

  • Marcon
    Marcon Posts: 12,996 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    edited 4 October 2024 am31 8:52AM
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    The starting point is 50:50, but that doesn't mean pensions (or indeed overall marital assets) will be split like that. Other assets might be used instead of sharing the pension eg wife keeps house, husband keeps pension or vice versa; wife might have some pension assets of her own which will be taken into account. 

     The position is different in Scotland - only pension benefits built up during the marriage can be shared.

    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Silvertabby
    Silvertabby Posts: 9,724 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    Marcon said:
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    The starting point is 50:50, but that doesn't mean pensions (or indeed overall marital assets) will be split like that. Other assets might be used instead of sharing the pension eg wife keeps house, husband keeps pension or vice versa; wife might have some pension assets of her own which will be taken into account. 

     The position is different in Scotland - only pension benefits built up during the marriage can be shared.

    Spot on.  During my LGPS days I carried out hundreds of divorce CETV calculations, but less than 10%  progressed to actual pension sharing orders (PSOs).  Presumably because their values were offset against other marital assets.
  • If you are fairly close to retirement age (and subject to whole host of other factors, including what the matrimonial assets are, how long you have been married and whether or not there are dependant children), the court (if you are unable to settle the matter yourselves) will be concerned to ensure that both parties will have a fair share of the retirement pot to satisfy their future needs. The closer you are to retirement, the more likely it is that the court will be looking at how the available pensions can provide equality of income during retirement, rather than simply dividing the pot 50/50. That is a complex matter requiring a pensions expert.

    However, as mentioned above, it is possible to keep hold of more of your pension pot if you are prepared, for example, to let your soon to be ex-spouse to have more of the available capital.  
  • DullGreyGuy
    DullGreyGuy Posts: 15,737 Forumite
    10,000 Posts Second Anniversary Name Dropper
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    It's rare for things not to be split 50/50 during a divorce even if you brought things into the marriage that you owned solely in your name. 

    As others have said however its the total value that has to be split 50/50 not each individual item so if you had one person with a large DB pension, the other with none and they jointly owned a house mortgage free then rather than splitting the house and the pension 50/50 it could be agreed one gets the house and the other gets the pension, assuming they're roughly equal value. 

    Marcon said:
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    The starting point is 50:50, but that doesn't mean pensions (or indeed overall marital assets) will be split like that. Other assets might be used instead of sharing the pension eg wife keeps house, husband keeps pension or vice versa; wife might have some pension assets of her own which will be taken into account. 

     The position is different in Scotland - only pension benefits built up during the marriage can be shared.

    Spot on.  During my LGPS days I carried out hundreds of divorce CETV calculations, but less than 10%  progressed to actual pension sharing orders (PSOs).  Presumably because their values were offset against other marital assets.
    I'm surprised it's that high... dealt with PSOs from an annuity perspective and it was way less than 10% that actually were ordered. Dunno if it was people deciding not to split up after seeing how much they'd lose or finding another mechanism to distribute assets. 
  • Silvertabby
    Silvertabby Posts: 9,724 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    edited 4 October 2024 pm31 1:08PM
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    It's rare for things not to be split 50/50 during a divorce even if you brought things into the marriage that you owned solely in your name. 

    As others have said however its the total value that has to be split 50/50 not each individual item so if you had one person with a large DB pension, the other with none and they jointly owned a house mortgage free then rather than splitting the house and the pension 50/50 it could be agreed one gets the house and the other gets the pension, assuming they're roughly equal value. 

    Marcon said:
    theyiddo said:
    Hi,

    My ex and I are likely to divorce in the foreseeable. The only significant assets we have between us are my Defined Benefit Pensions (I'm a deferred member in one, and an active member in the other).

    Does anyone know what the general rules are around Pension Sharing Orders? Is it generally 50/50 split no matter how long the marriage has overlapped with the pension scheme membership/contributions.

    As an example, for the deferred pension, I was an active member for 10 years, and we were only married for the last 2 years that I paid into that scheme. Would my ex be entitled to 50% of the CETV of that pension or would it be pro-rata'd (i.e. 50% of 2/10 years)?
    The starting point is 50:50, but that doesn't mean pensions (or indeed overall marital assets) will be split like that. Other assets might be used instead of sharing the pension eg wife keeps house, husband keeps pension or vice versa; wife might have some pension assets of her own which will be taken into account. 

     The position is different in Scotland - only pension benefits built up during the marriage can be shared.

    Spot on.  During my LGPS days I carried out hundreds of divorce CETV calculations, but less than 10%  progressed to actual pension sharing orders (PSOs).  Presumably because their values were offset against other marital assets.
    I'm surprised it's that high... dealt with PSOs from an annuity perspective and it was way less than 10% that actually were ordered. Dunno if it was people deciding not to split up after seeing how much they'd lose or finding another mechanism to distribute assets. 
    I wonder if it's because of the high value of DB pensions?  Possible that, in many of these cases, the divorce CETV was the bulk of the marital assets.
  • Albermarle
    Albermarle Posts: 25,993 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
     Kismet_Hardy said:
    If you are fairly close to retirement age (and subject to whole host of other factors, including what the matrimonial assets are, how long you have been married and whether or not there are dependant children), the court (if you are unable to settle the matter yourselves) will be concerned to ensure that both parties will have a fair share of the retirement pot to satisfy their future needs. The closer you are to retirement, the more likely it is that the court will be looking at how the available pensions can provide equality of income during retirement, rather than simply dividing the pot 50/50. That is a complex matter requiring a pensions expert.

    However, as mentioned above, it is possible to keep hold of more of your pension pot if you are prepared, for example, to let your soon to be ex-spouse to have more of the available capital.  
    Regarding the comment in bold. I am not an expert but I think even if you can amicably sort out the finances between you, you still need a court to sanction the agreement if you want it to be a proper legal financial settlement. ( typically as the final part of a divorce) 
    The advantage of this is that it draws a line, and there can be no future arguing about what has been agreed.
    The problem with informal agreements is that issues can be resurrected at a later date. The other issue is that the general level of understanding in the population of personal finance is pretty poor. Add to this the emotions involved then the likelihood of an informal agreement actually being fair to both parties ( either deliberately or through ignorance) is probably not that great.
  • Marcon
    Marcon Posts: 12,996 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
     Kismet_Hardy said:
    If you are fairly close to retirement age (and subject to whole host of other factors, including what the matrimonial assets are, how long you have been married and whether or not there are dependant children), the court (if you are unable to settle the matter yourselves) will be concerned to ensure that both parties will have a fair share of the retirement pot to satisfy their future needs. The closer you are to retirement, the more likely it is that the court will be looking at how the available pensions can provide equality of income during retirement, rather than simply dividing the pot 50/50. That is a complex matter requiring a pensions expert.

    However, as mentioned above, it is possible to keep hold of more of your pension pot if you are prepared, for example, to let your soon to be ex-spouse to have more of the available capital.  
    Regarding the comment in bold. I am not an expert but I think even if you can amicably sort out the finances between you, you still need a court to sanction the agreement if you want it to be a proper legal financial settlement. ( typically as the final part of a divorce) 
    The advantage of this is that it draws a line, and there can be no future arguing about what has been agreed.
    The problem with informal agreements is that issues can be resurrected at a later date. The other issue is that the general level of understanding in the population of personal finance is pretty poor. Add to this the emotions involved then the likelihood of an informal agreement actually being fair to both parties ( either deliberately or through ignorance) is probably not that great.
    There's also the little matter of it not being possible to share/split a pension other than following a divorce and the making of a relevant court order in respect of the pension(s).

    Given OP's opening thread said their DB pensions are the only significant assets they have between them, there may not be any alternatives to divvying up those pensions in some way.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • CSL0183
    CSL0183 Posts: 286 Forumite
    Part of the Furniture 100 Posts Name Dropper
    If you get divorced in Scotland, assets are calculated from date of marriage to date of separation. Whatever you had before the date of marriage is yours and whatever you have accrued since the date of separation is also yours. 50% for the dates in between. 

    A much fairer system than it is south of the border for sure. 

    May be worthwhile moving to Scotland for a year and then applying through a Scottish court ;) (pre requisite is you need to have lived here for a year) 


  • 50% of the matrimonial assets is simply the starting point. Take a look at s25 Matrimonial Causes Act for the factors taken into account by the court. If you are looking at a decent length marriage, the court will be keen to achieve equality between the parties, but it may be good reasons to do otherwise and what the parties NEED may be such a reason. Albermarle is right that you need a court order to give legality to anything you sort out between yourselves. This doesn't mean that you absolutely MUST have a court order, but it does mean that you would be foolish not to have one, as you won't have that legal finality otherwise. Also, be aware that the court does not have to approve any settlement that you agree between yourselves. Rather, it will need to be satisfied that what you have agreed is fair in all the circumstances. Marcon is also correct in that you need a court order if the pension is to be divided between the two of you. CSL0183 - if what you say about the Scottish system is true, you will forgive me if I don't agree that it is a fairer system. There is flexibility built into the English/Welsh system which allows for pensions built up outside of marriage to be taken into account or not based on all the circumstances of the case.
  • I have no idea why that came out in one block of text as I certainly did use paragraphs!
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