Anita Shepherd – head of Family Law – on the Pension Sharing Orders and the New Single-Tier State Pension Rules

The Department of Work and Pensions (DWP) has recently published guidance on how State Pension sharing will work in the light of the new Single-tier State Pension rules being introduced from 6th April 2016.  The information is aimed at legal and financial advisers, as well as the courts that make sharing orders.

In simple terms, it will no longer be possible for spouses or civil partners, where the transferor’s National Insurance (NI) records start in the new scheme, to be awarded a shared pension based on the transferor’s NI record by the courts.  This is because the new Single-tier State Pension cannot be subject to a share order.  However, the Protected Payment element of the transitional rate of new State Pension for those whose NI record straddles 6th April 2016 may be shareable.

It is essential that spouses review this aspect of their financial circumstances at the same time as dealing with their other matrimonial finances on relationship breakdown.  Each case will be different depending on the ages of the spouses or civil partners and the level of protected pension payments as well as the level of the other assets and needs of the case.

Specialist advice from an experienced family law practitioner and a financial adviser will no doubt be required to ensure that a fair outcome is achieved.  Also, don’t neglect your future pension entitlement rights and requirements when reaching a full and final settlement following a divorce or civil partnership dissolution, as you may regret it if you find in retirement there is a disparity between yours and your former spouse’s or civil partner’s retirement income and or benefits.

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