We need to do the groundwork first here.
There are now a number of different types of pensions. The most important 2 categories for our purposes however, are state pensions and non-state pensions.
When it comes to the state pension there is firstly the basic state pension. A person’s entitlement to a basic state pension is based upon how many years of national insurance contributions they have made. The state pension has generally been less of an important consideration for the courts to consider on divorce. That is because of provisions which allowed the spouse with the lower contributions record to substitute the national insurance contributions record of their former spouse.
There are also a number of types of additional state pension. These pensions top up the basic state pension.
It is important to be aware that in 2013 the government announced changes to the state pension laws (these changes have now been brought in). The plan is to simplify the state pensions system and to do away with the additional state pensions. Under the plans, the rules in relation to substituting your former spouse’s national insurance contributions will also change.
After the first set of changes the government also announced a set of reforms which will allow people to use their pension funds more flexibly. In particular it will be possible for more money than previously to be drawn down as a lump sum.
Non-state pensions come in various shapes and sizes. There are for example a number of public sector schemes where the pension benefits can be very significant for those who served for a high number of years. On the other hand there are private sector schemes where the value of the benefits will depend on a large number of factors.