New pension rules for divorcees

Divorcing couples in the UK can now split their pensions in two for the first time, allowing them to arrange a clean financial break.

In many cases the old pension rules left one of the partners without sufficient pension provisions, or tied the couple together for decades after the divorce.

The new rules, coming into force on 1 December, give the poorer divorcee a chance to claim a share of their former spouse's pension.

However, experts warn that the split makes only sense for relatively rich ex-couples, with a pension pot worth more than £200,000.

The change of law comes after a five-year campaign from the Law Society and pressure groups like Fairshares.

Only a minority will benefit

The old regulations gave divorcees no legal claim on their former spouse's pension after a split, which was seen by many to be unfair.

The new rules should allow divorcing couples to achieve a fairer settlement of their financial affairs.

Pension splitting will not be compulsory, though. Partners will be able to object to any application for a split.

Going through with pension splitting costs a lot of money.

A divorcing couple may have to pay a pension fund up to £1,000 just to complete the paperwork.

And the value of the pension fund at the time of divorce will not reflect its value at retirement.

Financial advisers say that the value of the pension pot will have to be at least £200,000 before it makes sense to split it in two.

Nonetheless, the new rules have received a broad welcome, even though they will benefit only a minority of the about 145,000 couples seeking a divorce every year.