Pensions and divorce: our top five frequently asked questions
We look at pensions and divorce in the latest in our series of top five FAQs on pensions technical topics.
- What can the ex-spouse/civil partner do with a pension credit?
If the scheme does not allow the ex-spouse/civil partner to become a member, the transfer value can be paid to a personal pension. If the pension credit is coming from an occupational scheme, a Section 32 will also be an option.
The value could also be transferred to a scheme the ex-spouse/civil partner is already a member of, if the rules of the receiving scheme allow.
- Is it possible to take tax free cash from a pension credit?
If the pension credit originated from crystallised benefits such as an annuity, a DB pension in payment or funds in drawdown, it is not possible for the ex-spouse/civil partner to take any tax free cash. This is called a disqualifying pension credit.
- Is it possible to apply a pension sharing order when you are not married or in a civil partnership?
No. Pension sharing is only an option on divorce. It is not an option for unmarried couples or couples not in a civil partnership.
- When giving advice on a pension credit coming from a DB scheme where the only option is a transfer out, are the pension transfer permissions required?
As the ex-spouse/civil partner is not giving up any benefits in the DB scheme, the pension transfer permissions are not required.
- Are there any pensions which can’t pay a pension credit to an ex-spouse/civil partner?
Yes. State pensions, pensions inherited on death including beneficiary drawdown or any pensions which already have an earmarking order as a result of a divorce.