Pensions And Cohabitation
“I keep hearing about the pension problem but I’m not too worried because I will get a share of Andy’s if we split up.”
Not if you are not married!
Pensions can be divided by Court Order but only for married couples or for those gay couples who have formed civil partnerships.
No matter how long you live with someone you cannot get a pension sharing order if you separate and were not married or part of a civil partnership. There is no legal power to share private or occupational pensions and there is no such thing as a common law spouse.
So, unlike a married woman, you cannot rely upon your husband’s contributions to the state pension system to provide you with any pension. You need to make your own contributions or to fill out the right forms to exempt you from these contributions if you are not working due to child care or family responsibilities.
If you cannot obtain a pension sharing order, then you should think about making provisions for a pension yourself. You need to take advice. preferably from an Independent Financial Adviser (IFA) who is not tied to a particular product. He will charge by the hour rather than working on a commission basis which comes from selling you a product.
You should also protect yourself if your relationship breaks down and work out how you would deal with the assets that you bought into and built up during your relationship.
It may not be romantic but it is certainly sensible to try and resolve these issues in case things go wrong before they go wrong.
Take Alice and Bob who have lived together for 15 years and have two children. Alice stayed at home following the birth of the children and then returned to work part time. She cannot benefit from Bob’s pension and she has no private pension of her own. However Bob has agreed to name her irrevocably as the beneficiary of the substantial death benefits from his employer. He has also transferred the house into Alice’s sole name so that she can downsize and release capital for her retirement. In addition she checked with the Department of Work and Pensions and confirmed that, as the child benefit was in her name, her entitlement to state pension is protected during the time she was unable to work full time due to her home caring responsibilities.
The pensions crisis means many people will have very poor pensions in the future but there are ways you can try and protect yourself. However the rules for cohabiting couples are not the same as those for married ones so please take proper legal and financial advice on your particular circumstances.
For more information contact Maggie Roberts, partner and member of Foot Anstey’s Living Together team, on 0845 1400025
Published 27/05/2008. The author of this article is Maggie Roberts
