Divorce and your pension

If you get divorced or dissolve a civil partnership, the Court will take the value of your pension into account when determining any settlement.

You and your ex-spouse or partner will each need to tell the Court the value of your pension scheme(s).  

If you live in England, Wales or Northern Ireland, it is the value of your pension benefits at the date of divorce or dissolution of the civil partnership that is counted.

If you live in Scotland, it’s the increase in the value of your pension benefits over the course of the marriage or civil partnership that is counted. This means that pensions should be valued at the date of separation.

When you go to Court, you and your ex-spouse or partner can decide how any pension benefits are split:

Pension sharing –  a proportion of your pension is awarded to your ex-spouse or partner, this amount will be dependent on the court order. You both will have a separate pension account . If you are an active member of the LGPS Scheme you can continue to build pension benefits for the future and your ex-spouse or ex-civil partner will not have access to these.

Pension offsetting – you both keep your own pension benefits but adjust the proportion of other assets to take account of the value of the pension benefits. For example, you could keep your pension, and your ex-spouse or ex-civil partner could get a larger share of the value of the home you own.

Pension earmarking – this is an arrangement that when one person’s pension benefits become payable on retirement, a proportion (the earmarked part) will be paid to the other person.

You may wish to get legal advice from your solicitor on how to deal with your LGPS benefits during any divorce or dissolution of a civil partnership.

If the Court issues a pension sharing order, a percentage of your scheme benefits are transferred to your ex-spouse or ex-civil partner.

Your ex-spouse or partner will hold those benefits in their own right. This is known as a pension credit. 

Your pension and any lump sum will be reduced by the percentage allocated to your ex-spouse or ex-civil partner at the point of divorce/dissolution. The reduction is called a pension debit.

The value of the pension debit will increase each year in line with the cost of living until the date of retirement when your pension is paid. When you take your pension, the increased amount will be deducted from your pension benefits. The pension debit amount will be adjusted if you take your pension before or after your normal pension age.

You may wish to increase your pension to make up for the reduction following a pension sharing order. You can find information on paying extra to increase your pension in the Paying more section.

If your LGPS pension is subject to a pension sharing order, you can still transfer your remaining benefits to another pension arrangement. If you transfer within the LGPS, your new fund will reduce your benefits by the pension debit when you take your pension.

If the Court makes an Earmarking Order, your LGPS benefits still belong to you, but some are earmarked for your ex-spouse or ex-civil partner. The earmarked benefits will be paid to your ex-spouse or ex-civil partner when your benefits are paid, reducing the amount paid to you.

The Order can require that your ex-spouse or ex-civil partner receive one or a combination of the following:

• all or part of your LGPS pension –
• all or part of any lump sum payable to you, and
• all or part of any lump sum payable on your death.

When earmarked benefits become payable, the Fund will contact your ex-spouse or ex-civil partner to check that the Earmarking Order is still valid and arrange to pay the earmarked benefits.

You can transfer your benefits to another pension arrangement on leaving the LGPS, as long as your new pension provider can accept the Earmarking Order.

Earmarking has limitations and is not widely used. As the pension rights remain with you, your ex-spouse or ex-civil partner must wait for you to retire or die to receive the earmarked benefits. If your former spouse or civil partner remarries or enters into a new civil partnership, an Earmarking Order against pension payments would cease and the full pension would be restored to you. This would not affect any lump sums, unless the Order directs otherwise.

Pension payments to your former spouse or civil partner would stop on your death, although any earmarked lump sum death grant would then become payable to your ex-spouse or ex-civil partner.

If your LGPS benefits are subject to a pension sharing order and you:

• remarry
• enter into a new civil partnership, or
• enter into a cohabiting partnership

any spouse’s pension, civil partner’s pension or eligible cohabiting partner’s pension payable following your death will also be reduced.

If you remarry or enter into a new civil partnership and then divorce or dissolve your civil partnership again, your remaining pension rights can be subject to a further reduction. A pension sharing order cannot be issued if an earmarking order has already been issued against your LGPS pension. Similarly, an earmarking order cannot be issued if your pension benefits are already subject to a pension sharing order.

After your divorce or dissolution of a civil partnership is completed:

• your ex-spouse or civil partner will no longer be entitled to a partner’s pension if you die before them
• if you previously nominated your former spouse or civil partner for any death grant benefits, you may wish to update this by completing a new Expression of Wish 
• any children’s pensions that are payable after you die are not affected by your divorce or dissolution.

When you take your LGPS pension, its value will be assessed against the lifetime allowance. The lifetime allowance is the total value of pension savings that you can have before additional tax is payable. If your benefits are subject to a pension sharing order, the reduced value of your benefits after the pension debit has been deducted will be used.

The current lifetime allowance is £1,073,100. Most scheme members will not be affected by the lifetime allowance. Please note Lifetime allowance is to be abolished in April 2024.

Each year that you pay into the LGPS, the increase in the value of your benefits is measured against the annual allowance. The annual allowance is the maximum amount that your pension can increase by in a year before you have to pay extra tax. The reduction in your pension due to a pension debit is ignored in the year that the pension sharing order or qualifying agreement is applied to your benefits.

You can find out more about the lifetime and annual allowances in the Tax and your pension section.