Important changes to state pension sharing in divorce cases

February 23, 2016, By

Changes coming into force from 6 April 2016 will have a significant effect on what you and your ex will be able to claim in respect of each other’s State Pension as part of your divorce or civil partnership dissolution.

Under the current law yours or your ex’s  Additional State Pension can be shared by means of a pension sharing order. The Additional State Pension is based on your National Insurance contributions and is an extra amount of money you could get with your basic State Pension.  The order would apply to any amounts over the basic state pension (around £115 per week).

Currently, you  can also use your ex’s National Insurance contributions in order to boost your own State Pension entitlement.

This is due to change under the new law:

From April, the Additional State Pension is to be replaced with a ‘Protected Payment’. As a consequence, not only will you be unable to use your ex’s State Pension entitlement to build up your own, but as the Additional State Pension will be phased out, the opportunity for sharing this will be limited and in some cases, lost altogether.

The ‘Protected Payment’ pension will be shareable but only if your or your ex’s new State Pension exceeds £155.65 per week. As the DWP has noted, this means that around £36 per week (i.e. around £1,872 per year) will not be shareable where previously it would have been.

Pensions assets are often very significant and if you are going through divorce or civil partnership dissolution it’s vital that you consider how the proceedings will affect your financial security. Our family law specialists are happy to guide you through the maze of pension sharing. To get in touch, call us on 0161 969 3131.