Will my divorce affect my Police pension?

When considering finances as part of a divorce or civil partnership dissolution, pensions are often a valuable asset to be divided.

Police pensions are often considered more generous than those from other sectors or occupations. The Police Pension Scheme is unfunded, which means the employer pays pension benefits out when they are due, rather than accumulating a fund to draw on.

With Police pensions being so unique, many people are concerned about what will happen to their pension benefits during the division of assets as part of a divorce or separation. In this blog, we explain how this works.

How are police pension payments calculated?

If you leave the Police force before you’ve completed 25 years of service, you will receive your retirement benefits at age 60. Should you leave having completed 30 years of service, you will be able to retire on a full pension.

If, however, the Cash Equivalent Value is calculated whilst you’re in active service but before you complete 25 years, the calculations are unlikely to take into account up to 12 years’ worth of pension payments.

As a result, when considering the division of pensions upon divorce or dissolution, your solicitor may need to instruct an actuary (a specialist in the management and analysis of pension plans) to prepare a report that calculates what percentage split is required to achieve a fair division. Failure to do so may result in inequality when implementing the Pension Sharing Order (more on this below).

Is my ex entitled to my Police pension?

The first step when dividing your pension (and any other finances) is to provide your ex-partner with full disclosure of your financial situation (and they should do the same). Your lawyer will help you to do this, using a ‘Form E’ which sets out all your financial information, including your Police pension.

Police pensions are included as an asset in the financial statement you provide when dividing your finances, so yes, your ex may be entitled to some of your Police pension.

If the court makes an order for an individual’s pension to be shared, their former spouse is allocated a percentage of their benefits. This is known as a Pension Sharing Order.

How are Police pension payments calculated?

Usually, the calculation of an individual’s pension is based on the Cash Equivalent Value (CEV); however, calculating a Police pension scheme this way can significantly underestimate the value. This is, in part, because the CEV assumes that the member left the Police service on the day on which the calculation is produced.

In the example below, our divorce finance solicitors consider factors that might create inequality when dividing pension benefits between a serving Police officer and their spouse following divorce.

Police pension case study

PC Jones joined the force at 18 and is now 42. He earns £30,000 per annum and is in the process of divorcing Mrs Jones, who is two years younger than him. The Police Pension Scheme calculates the value of his pension at £160,000.

Mrs Jones doesn’t have a pension and is seeking a PSO (Pension Sharing Order). If a PSO for 50% of PC Jones’ pension benefits is granted, Mrs Jones will receive approximately £8,000 per annum when she reaches 60.

On the other hand, PC Jones can retire in six years with 30 years of service and an income from his pension rights accrued before the divorce.

This would provide £12,000 per annum (75% of accrued pension), plus the income from his pension rights accrued after divorce of £4,000 per annum, giving PC Jones a total income of £16,000 per annum. This would be payable for 14 years before Mrs Jones was entitled to receive anything.

Using an actuary would ensure that a 98% percentage split of PC Jones’ pension resulted in equality. PC Jones could retire at 48; he’d have a pension income of half his pension rights accrued before divorce (£8,000 per annum), plus all the pension rights accrued after divorce (£4,000 per annum).

This will provide both PC Jones and Mrs Jones with £12,000 per annum.

Can I protect my Police pension in a divorce?

Potentially, yes. The best way of protecting your Police pension, or any other asset, is by having a Prenuptial or Postnuptial Agreement or cohabitation agreement which ‘ringfences’ your pension should you divorce or separate in the future.

The only difficulty with this is that these agreements require your partner’s consent, which may raise questions as to how your other assets may also be divided. However, having a written agreement is the most effective way of protecting your Police pension.

It is worth noting that these types of agreement are not currently legally binding in England and Wales. That is not to say, however, that the court will not consider them alongside other factors when establishing who is entitled to what during divorce or separation proceedings.

If you do not have a marital or civil partnership agreement, in some cases, your solicitor may argue that pension funds built up before the marriage or civil partnership should not be shared with your ex. This will be factored in alongside numerous other considerations, such as financial contributions, childcare arrangements and property.

If you are unsure about what you and/or your ex might be entitled to, or you have concerns about dividing finances, our divorce and separation solicitors are here to help.

Contact our divorce finance solicitors

Are you a serving Police officer who needs guidance on your pension? To discuss dividing finances, including your Police pension, as part of a divorce, separation or civil partnership dissolution, get in touch.

Complete our online contact form or call us on 0117 325 2929. Alternatively, you can make a start online using our simple questionnaire.