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Police pensions and divorce

AuthorsAmy Harris

6 min read

Police pensions and divorce

There are many options for the Family Court to consider when dealing with assets such as public sector and police pensions following divorce or dissolution of a civil partnership.

In this guide, we explore the options available, and look at how individuals may seek to protect their pensions in the event of relationship breakdown

How can the court deal with police pensions in divorce cases?

On divorce, or dissolution of a civil partnership the court can consider all financial resources available to both spouses. This includes, but isn’t limited to property, pensions and income.

The family court has wide ranging powers to distribute those financial resources to achieve a fair outcome upon divorce. For the majority of people this will include division of assets to ensure that the couples’ needs are met following separation.

Pensions are complicated assets and for many police officers may be accrued over a long period of time. There are also different types of police pension schemes including the Police Pension Scheme 1987, Police Pension Scheme 2006 and Police Pension Scheme 2015.

Police pensions can generate a cash lump sum in addition to income so it is important to consider how the cash and income portions of a pension may be utilised on divorce.

On divorce, it is advisable to instruct a family lawyer who has experience of how public sector pension schemes such as the Police Pension Scheme work.

Pension sharing

A pension sharing order involves sharing the member’s benefits under a pension scheme so that the non-member spouse has their own independent rights either in that scheme or under a new scheme. For police pensions it will be necessary for the non-member spouse to stay within the Police Pension Scheme.

As part of the divorce settlement, it may be agreed that a certain percentage of the pension will be transferred to the former spouse. Once that transfer has taken place there will be a clean break and the non-member spouse will not be able to make any further claims in respect of the pension in the future.

A share can be calculated either by reference to the capital value of the pension, which will be the cash equivalent transfer value (CETV) or by sharing the income the capital fund will produce. It is common for a pension actuary to be instructed by your divorce lawyer to help to determine the appropriate pension share to achieve a fair outcome.

Pension offsetting

In some circumstances a police officer may wish to retain their pension and may agree for their spouse to retain, for example, the family home. Alternatively, depending upon the value of the assets then it may be preferable to seek a partial offset. In such circumstances it is important to assess how a fair outcome can be achieved as £1 of pension doesn’t necessarily have the same value as £1 of cash.

To ensure that a fair outcome can be calculated it is likely to be advisable to seek advise from a specialist actuary with experience of police pensions. The actuary can advise the couple the best way to achieve an offset. The benefit of a pension offsetting is that you can avoid the costs associated with a pension sharing order and potentially leave your pension in tact. However, financially it may be not be advisable for one party to keep all of the pension assets and for the other to retain the property/ cash assets. Quite often it may be sensible for each person to retain a blend of different types of assets following divorce.

Pension attachment

Pension attachments orders are fairly rare. They involve the trustee of a pension scheme being instructed to pay a proportion of a member’s pension to their former spouse at the time the pension is taken. This may be part of a lump sum or income.

Such pension attachments orders are rare because of the risks involved in making them. For the majority of divorcing couples there are greater advantages in pursuing a pension sharing order and the clean break that provides instead. Specialist advice is required if you are considering a pension attachment order.

The main disadvantage is that the pension attachment order for payment on income will cease upon the death of the member spouse, this makes it very unattractive to a spouse. They also prevent an immediate clean break and as they are a form of income order are capable of being variation. The lack of a separate fund in their own names and the lack of a clean break is risky.

Deferred lump sum

In some circumstances it may be appropriate to defer a lump sum payable to your former spouse until you receive a lump sum on retirement from the police force. However, deferring a lump sum may not be appropriate in every case so it is sensible to take advice.

What if it is a “needs” case?

For the vast majority of police officers who divorce, the court’s focus will be on ensuring that their needs and the needs of their former partner are met following separation.

A specialist family lawyer will be able to advise you the most appropriate way for any disparity in pensions to be addressed following divorce.

Recent case law has confirmed that in “needs” cases it will rarely be appropriate to seek to ring fence pensions that have accrued either before marriage (or civil partnership) or following separation.

What do I need to do to protect my police pension?

The best way to protect your police pension is not to marry at all. However, if you have married and are separating it is best to speak to a lawyer who has experience of advising police officers.

For those police officers considering marriage, it may be sensible to seek advice on entering into a pre-nuptial agreement as depending upon your circumstances you may be able to try to ring fence your police pension from any claims in the future by your future spouse.

If you have married, or entered into a civil partnership and are separating, the best advice is to speak to a specialist family lawyer who has experience of dealing with police pensions upon divorce.