Divorce – How does this affect your state pension?

Browndog Agency Blog

Recent changes to state pensions could result in thousands of people facing a drastic cut in their potential State Pension entitlement upon divorce.

The Office for National Statistics indicate that there are approximately 110,000 divorces each year and therefore this could affect a huge amount of people.

Under the old rules it was possible for a divorced spouse – until their remarriage – with a lower National Insurance Contribution/ lower state pension entitlement, to adopt their ex spouses’ state pension provision on divorce without affecting the amount of state pension their ex spouse would receive.

Both parties could therefore enjoy the full rate of the ex spouse with the highest state pension provision. This was known as the Substitution Rule.

The new rules, which came into force in April 2016, now specify that your State Pension entitlement will be based solely on your own National Insurance records. It is still possible that a spouse can seek the enhancement but only in very limited circumstances.

What can be done in relation to this?
When determining the division of matrimonial finances within divorce the Court have the power to divide pension provision. In certain circumstances, it may be possible to obtain a pension sharing order for any Additional State Pension provision or any difference in State Pension Values, including basic rate and additional state pension, could be offset against any private pensions to ensure pensions are properly and fairly divided.

Alternatively, it may be appropriate to apportion other matrimonial assets so as to take account of the disparity between the couples State and Private Pensions.

If you are unsure as to whether you would be affected by these changes it is possible to obtain information from the Department for Works and Pensions. This can be requested online or by sending the request in Forms BR19 and BR20.