How to protect your pension after divorce – everything you need to know
DIVORCE is one of the most stressful experiences you can go through in life, not least because of the debate over how to split your finances.
While the family home is often given careful consideration, pensions are a vital factor often overlooked.
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But this can have severe consequences later down the line.
Pension savings can be worth hundreds of thousands of pounds, yet, all too often these cash pots get ignored when it comes to divorce, and it's usually women who miss out.
Their pension pots are often smaller than men's due to taking career breaks to look after children or working part-time.
The oversight costs women more than £77,000 on average when it comes to retirement, according to research by provider Scottish Widows.
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Yet, more than more than 60% of divorced women didn't go through pension assets during a divorce.
Susan Hope from Scottish Widows, says: 'The main reason women still lose out is because they simply are not aware of the potential value and that pensions should be included in the family assets.
'Divorce can be an extremely stressful and intense time. It can be easy for pensions to sink down to the bottom of the priorities, especially if it's a DIY divorce.
She added: "Some may prioritise keeping the family home or taking more cash from a sale, but without seeing the full picture..
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"This could be at the expense of a fair pension share, so it's important to have the right conversations.'
Could you be eligible for Pension Credit?
HOW TO DIVIDE A PENSION
There are a few different ways to split a pension.
It is important to note the value of the pension may be offset against other assets.
For example, one person could agree to take a bigger share of the home instead of any of the other person's retirement pot.
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Or the pension could be shared with an agreed percentage transferred to the former spouse.
In this case, it's a clean break, according to Dean Butler of pension firm Standard Life.
He adds: 'On the downside, it can be quite complicated to set up and needs an order from the court.'
Another alternative is called a 'pension attachment order', which is where one person agrees to pay a portion of their pension income to the other, but only when it starts being paid.
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Dean says: 'This also requires a court order and the first person retains quite a lot of control of when and how the pension is used, and payments will stop when they die.'
WHAT TO DO WITH CASH
After a divorce, you should always take stock of how much you'll need for retirement and whether you have enough.
Rachel Vahey, head of public policy at AJ Bell, said:'You may find the income you expected to get at retirement has taken a hit.
'Whether your ex-partner kept the bigger proportion of the pension or you shared some of your retirement savings with them, now is the time to think about how to boost your pot.'
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You can go through a three-step online pension check on the government's website nestpensions.org.uk to check if you are on the right track for a comfortable retirement.
If you are falling short, look at what your employer can offer.
It could be worth upping contributions through a workplace scheme, especially if your employer will match the contribution.
Even increasing savings by a small amount can make a big difference in the long term.
If you do receive a share of a pension pot, you'll need to think about whether it's in the right place.
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You could save fees by combining it with any other pensions.
Having your cash in a single and bigger pot also makes it easier to manage.
CHANGE YOUR EXPRESSION OF WISHES
Many people don't realise that pension assets are not usually covered by your will.
And if you die before taking a private pension, your provider will then decide where the cash goes.
This is usually done based on an 'expression of wishes'. This is a form you'll usually fill out when setting up the savings pot.
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Crucially, if you gave your spouse's name when you set up the account, you need to remember to change this when you divorce – assuming you no longer want them to receive the benefits.
Ed Monk, associate director at savings provider Fidelity International said: 'If your life circumstances change and you're seriously considering ending your marriage or civil partnership..
"It's important to change your expression of wish to reflect any change in who you want to receive your pension payments in the event of your death.'
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We explain the best tips so you don't loose out when you go through a divorce
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'I would definitely be worse off'
By Lana Clements
TRACEY Ford, 51, was married for 14 years and initially didn't consider her ex-husband's pensions as part of joint assets.
The celebrant from Johnstone, Renfrewshire was mainly focussed on how to take over ownership of the house, when she decided to consult a solicitor on the situation.
It was only then that she was made aware that she would be due a portion of his civil service final salary pension.
She says: 'I had been self-employed for 25 years so didn't have a workplace pension.
'My ex-husband's pension was a sizable asset that I had completely overlooked until the solicitor pointed it out.
'We then went through a process to set up the appropriate paperwork so I'll receive a portion in the future.
'I would definitely be worse off in retirement had I not taken the pension into account.'
Nationwide £100 payout
MILLIONS of Nationwide customers are to receive a £100 cash sum over the coming weeks.
Around four million will receive a share of £410million as part of Nationwide's Fairer Share programme, which rewards its banking customers.
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Millions of Nationwide customers are to receive a £100 cash sum over the coming weeks
Credit: Getty
You will need to have opened a current account with Nationwide before March 31.
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Those with £100 in savings at that time will also see the boon if the account was used within the first three months of this year.
And Nationwide mortgage borrowers with more than £100 outstanding qualify, too.
The cash will be paid into Nationwide current accounts between June 18 and July 4.
Chief executive Debbie Crosbie said: 'Nationwide has had an outstanding 12 months.
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"We returned a record £2.8billion in value to our members and recorded our highest ever year for growth in mortgage lending and retail deposit balances, and we remain first for customer service.'
It comes after Nationwide paid £50 to customers in April and May as part of its 'Big Nationwide Thank You' following the building society's Virgin Money takeover.
Those who have been Nationwide members since March 31 can currently get a £200 bonus by switching to Nationwide's FlexPlus, FlexDirect or FlexAccount.
An existing member is someone who has held a mortgage, savings account or current account with the company.
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Cash boost for retired
CHANCELLOR Rachel Reeves has announced plans to overhaul the UK pension system, aiming to increase average retiree savings by £6,000.
The reforms, part of the forthcoming Pension Schemes Bill, involve consolidating smaller defined-contribution pension schemes into larger 'megafunds'.
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Labour chancellor Rachel Reeves is set to overhaul the UK pension system
Credit: Getty
Assets will be pooled from the 86 separate Local Government Pension Scheme authorities into eight funds by 2030.
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The Government draws inspiration from successful models in Canada and Australia, where large-scale pension funds have achieved higher returns through diversified investments.
By pooling assets, the UK aims to enhance investment opportunities and stimulate economic growth.
Each megafund will set specific targets for local investment, potentially securing £20billion for community development.
While the reforms promise increased returns and economic benefits, experts warn that the consolidation could overlook the advantages of smaller, well-managed schemes.
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The Government plans to introduce the Pension Schemes Bill next year, with further consultations to make sure the reforms meet the needs of savers and the economy.
The Government says this is a significant shift in the UK's pension landscape, aiming to balance individual retirement savings with broader economic objectives.
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Are you on the state pension cliff edge and is the triple lock safe? Experts reveal what YOU need to do
We explain what a huge state pension review could mean for you PENSION TENSION Are you on the state pension cliff edge and is the triple lock safe? Experts reveal what YOU need to do MILLIONS of Brits could work for longer after the government announced a review of the state pension age this week. Chancellor Rachel Reeves says a review is needed to keep the state pension system 'sustainable and affordable'. 5 A huge review into the state pension is going ahead as concerns grow over the affordability of the system Credit: Getty 5 The current State Pension costs the Treasury around £125 billion a year Credit: Getty The current State Pension costs the Treasury around £125 billion a year – and it's only going to go up as we all live longer. The triple lock promise, which guarantees that the state pension increases in line with inflation, wages or 2.5%, is expected to hit £15.5billion a year by 2030. 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The government has also asked the Pensions Commission to tackle a savings crisis faced by retirees, including how much is saved via minimum auto-enrollment contributions and how to help self-employed people. Hargreaves Lansdown head of retirement Helen Morrissey, said: 'The concern is that many people are not saving enough and risk not having enough in retirement.' When will I get the state pension? The big question is whether the move to a state pension age of 68 will be brought forward. Any changes could mean people in their mid-50s being left facing a gap between when they planned to retire and when they can start claiming their state pension. For anyone under 55, it means that you will have to factor in working longer into your retirement plan. 5 Chancellor Rachel Reeves says a review is needed to keep the state pension system 'sustainable and affordable' Credit: AFP Former pensions minister and LCP partner Steve Webb said: 'The most likely change in the short to medium term is getting to 68 sooner, as this has been recommended by two previous reviews of state pension age.' A previous review, called the Cridland Review, recommended that the rise to 68 should be brought forward. Whatever happens the government must give at least 10 years notice of any increase to the state pension age. If the state pension age rises to 68 earlier than planned, people born in the early 1970s could lose out on £17,340, based on the state pension rising 2.5 per cent each year, according to AJ Bell. You can see when you will get the state pension as planned by using our Sun Club tool at 5 Anyone under 48 years old will almost certainly have a state pension age of 68 'We're relying on the pension... and now it's going to be pushed back and back' NICOLA Jones, 58, gave up her job as a mental health worker last year to become a full-time carer for her partner Tracy, 54, who has MS. The couple say they're very worried about potential changes to the state pension age, which they're hoping will ease the financial strain of living solely off benefits including Universal Credit and Carer's Allowance, which give them a joint monthly income of £1118.67. While Nicola will not be affected by the predicted changes, Tracy probably will. 'We're on the bread line as it is because I'm a full time carer and we have no savings. We keep hearing that people should be saving towards their pension, but we can't do that,' Nicola said. 'We're really struggling as it is, and we would rely on the pension coming in and just easing our life really and just making it less stressful, and now it's going to get pushed back and back - I mean, I've heard it could be going up to 70.' Is the triple lock safe? Raising the state pension age isn't the only way the government could cut its retirement bill - it could look at the triple lock. It has been a brilliant support to pensioners against inflation but at a huge cost to government finances. The government has ruled out axing the triple lock guarantee before the end of the current Parliament, which will be in July 2029 at the latest. Ms Morrisey said: 'Over the longer term we may well see the triple lock evolve - one option could be for it to move towards being a double lock instead.' Calum Cooper, head of Pensions Policy Innovation at Hymans Robertson, said: 'We estimate it should be replaced in the 2030s – it's a question of when, not if.' Another option could be looking at making it means tested - but this is unlikely, suggests Steve Webb. But he adds: 'Other changes could include increasing the number of years of contributions needed for a full pension'. At present you need 35 years to get the full state pension. 5 Is your pension about to be taxed? Another problem facing future pensioners is tax. You can earn up to £12,570 before you have to start paying income tax. That's your Personal Allowance. The full state pension is £11,973 a year – just £597 below that threshold. With the Personal Allowance frozen until at least 2028 millions of pensioners are heading towards paying tax on a state benefit. It's a looming political disaster that any government will want to avoid. What should you do now? The planned shake-up to rules shows that 'relying on the state pension alone for your retirement income is risky', says Rachel Vahey. 'If you're forced to wait a year or two to claim it, you'll either need to work longer or find tens of thousands of pounds extra from your pension and private savings to plug the gap,' she adds. If you're approaching retirement and concerned about your savings, she suggests downsizing your home to free up cash, or moving into another job, possibly part-time. 'The best way to give yourself freedom to retire on your own terms is to build up your private pension pot,' she says. Even if you're not yet approaching retirement, you should keep an eye on your pension savings so you know what you're on track to receive and can work out if you need to increase your contributions, Ms Morrisey added. 'Taking small steps like increasing your contribution to your private pension every time you get a pay increase or new role can make a big difference to what you end up with in retirement.' You should also make sure you haven't lost track of any old pensions from previous jobs, as you could be missing out on thousands of pounds. If you have lost track of a pension, you can use the government's pension tracing service to track it down, either by phone or at You can also use Gretel, a free online service that takes minutes to sign up. 'Once you've got a true idea of how much you have saved then you can make a plan to move towards the kind of retirement you want,' Ms Morrisey adds. For a single person looking for a 'moderate retirement' later in life, which would allow you to have a two-week holiday in Europe, a long weekend break in the UK, some eating out, as well as the ability to run a small car, you'll need to have a single annual income of £26,129, according to Hargreaves Lansdown. The State Pension isn't going to disappear or change overnight but pressure is building, and the current benefit is unsustainable. 'There's no doubt that making sure you have a good private pension is the best protection against future changes which make the state pension less generous,' concludes Webb.
