Pension warning: Getting a divorce? How your pension could be worth more than home | Personal Finance | Finance

“The second option is sharing. This involves transferring some of one party’s pension to the other to give them their own pension pot. Again, this gives the benefit of a clean break with full control over how their pension pot is invested and when they access it…

“The final option is earmarking, this is where a partner keeps their pension savings, but agrees to pay a portion of their retirement income to their ex-partner from the date they start to take it. No cash actually changes hands on divorce and it doesn’t offer a clean break.

“If you’re earmarked to receive some of your ex-partner’s pension you will not receive anything until they begin to [start] taking an income from their pension. There’s also a lack of security because it’s your ex-partner’s pension and the income will stop when they die. If you remarry or die before your ex-partner first, the full pension reverts to the ex-partner, your family won’t receive anything.

“Consequently, earmarking isn’t as popular as it once was.

“If you aren’t keeping a pension or your pension benefits have reduced as part of a divorce settlement, you should consider what your expected income in retirement will be once you have finalised the divorce. There may still be time to address any shortfalls and increase savings to get you back on track.”

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