The various ways former spouses can lose access to a pension

  • Describe some of the issues relating to separating couples or widows/widowers over pensions
  • Identify the procedures an individual must go through, when assessing their circumstances
  • Describe an advantage cohabitees have regarding pensions
The various ways former spouses can lose access to a pension

Recent changes to pension law and case precedents, as well as a lack of awareness and confusion around pension rights are meaning individuals are losing out on benefits they are entitled to.

Inevitably these amendments and confusion have impacted on elements of family law and vice versa, and it is important that financial advisers bear the following developments in mind when advising their clients. 

Pension splitting on divorce and dissolution

Statistics confirm than many spouses and civil partners are not aware that pensions that accrued during the relationship can be shared (pension splitting orders) on divorce or dissolution.

The sums can be considerable especially if it has been a long relationship with high income levels and so make substantial contributions into a pension during the relationship. 

The lack of knowledge may be because they have not sought legal advice on separation. More worrying is that the lack of knowledge can be as a result of being given negligent legal advice. 

Financial advisers need to be aware of what can happen to pensions on divorce and dissolution to ensure that their clients are not disadvantaged and to make sure that their clients get accurate legal advice and receive a fair share of any pension. 

Survivors’ pension 

It was revealed last year in The Telegraph that many widows/widowers are unaware that they can claim for their late spouses' pension, which could provide much welcome relief after a loss as well as maintain their standards of living.

In contrast, there was concern that those eligible who did claim the survivor’s pension were unaware of the rule that the payments would not be accessible if they were to remarry or why they could not leave their own individual pension to a second wife/husband if they had retired before remarrying. 

A particular case highlighted this and renewed calls for reform to survivors' pensions.

In January this year the High Court ruled that a D-Day veteran could not leave his police pension to his second wife, due to his pension scheme rules.

Eric Carter remarried in 1981 after his first wife died in 1979. He had retired in 1977 as a police officer, and due to scheme rules - as he married his second wife after serving in the police - she would not be eligible for a reduced widow’s pension.

What seems unfair to some, is that the rules changed in 1978, one year after he had retired, that meant all second spouses (even post-retirement marriages) would be entitled to a proportion of the pension if their husband was to pass away.

Mr and Mrs Carter claimed this was unlawfully discriminatory. Despite this claim, the couple lost their fight at the High Court, after Essex Police argued that Mr Carter had retired on a much more generous pension than police officers who retire today.