Sir Steve Webb was pensions minister for five years in David Cameron’s government and spent much of his working life understanding, and reforming, Britain’s complex pension system. He is a partner at consultants LCP

When the subject of pensions and divorce comes up, the focus is usually on cases where one partner has a big workplace pension, potentially worth hundreds of thousands of pounds, and the importance of including that in the divorce settlement.

But what is less well known is that, in certain circumstances, someone who divorces can boost their state pension and share in the National Insurance record of their ex-spouse.  

Indeed, I have no doubt that there are thousands of divorced women in retirement who could be getting a bigger state pension than they currently receive, if only they knew how the system worked.

Most of this article is about people who come under the ‘old’ state pension system – that is, those who reached pension age before 6th April 2016. I will also cover the ‘new’ state pension rules, but these are far more limited.   

One thing to be clear about is that what matters here is legal marriage (including civil partnerships) followed by divorce.  None of this relates to people who live together outside marriage, no matter how long they have done so. 

Similarly, you only count as divorced in the eyes of the government if you have a ‘decree absolute’ from a court, and not if you are simply separated and living apart.

Divorcing before state pension age

Let’s start with the simple case of a couple who both come under the old state pension system, and who marry and then divorce whilst under pension age.

Provided that the wife does not remarry before reaching pension age, she will be asked her marital status when she claims her state pension. She would supply details of her ex-husband and she would be able to benefit from his National Insurance record for the period up to the date of their divorce. 

To be more precise, his National Insurance record would be substituted for hers during that period.

One important point to note is that a wife using her ex-husband’s National Insurance record in this way to boost her pension has no detrimental effect on his state pension – this continues to be worked out in exactly the same way as before.

This ‘substitution’ of the ex-husband’s NI record applies to her basic state pension calculation. If the couple divorce relatively late in their working life, the wife’s pension can be based largely on her ex-husband’s contributions, and the result will often be that she is paid a full or nearly-full basic state pension. 

Note also that all of this process of substituting NI records is a legal entitlement administered by the Department for Work and Pensions. There’s no need to go to court, no need to persuade anyone of the merits of your case etc. You simply qualify for these things once you apply for them.

I have spoken so far only of the ex-wife using the husband’s contributions because that is how the system was originally set up. However, since 1979 it has been possible for a husband to use his ex-wife’s contributions in the same way to build up his own basic state pension. 

As many men build up a full basic pension in their own right in any case, this provision will be of limited impact, but there will be a small number of cases where the man needs to use his ex-wife’s contributions to achieve a full basic state pension.

Substituting NI record after you re-marry

Next we need to look at what happens if you re-marry after divorce.

The answer to this depends on whether you remarry before or after state pension age.

If you marry, divorce and re-marry all before state pension age then, from the point of view of the National Insurance system, the fact of the first marriage is completely ignored. You are treated as if you had been married to your second husband throughout. All rights to use the National Insurance record of your first husband drop away.

If you are divorced when you retire, but remarry after pension age then the good news is that this has no impact on your state pension. You continue to benefit from the contributions of your ex-husband, even though you remarried post pension age.

Divorcing after the pension age

Now we turn to those whose divorce happens after they reach pension age.

The good news here is that you can apply to have your state pension reassessed using your ex-husband’s National Insurance record for the whole of the period up to your retirement. In most cases this will result in payment of a full basic state pension.

But there’s a catch.

You only get this uplift if you notify the Department of Work and Pensions of your divorce. Until you tell them of your divorce, they will not reassess your pension. If you delay telling them then you miss out on the uplift for that period.

Many people, perhaps understandably, assume that the government ‘must know’ about their divorce. But I’m afraid that this is not how the system works.

Let me turn now to the other main element of the old state pension system – the “additional” state pension, often called Serps (the state earnings-related pension scheme). In this case, the only way that you can get a share of the Serps pension of your ex-spouse is via a court order as part of a divorce settlement.   

New state pension system

Finally, turning to those who come under the new state pension system, I’m afraid that there is much less provision for people to benefit from the NI contributions of an ex-spouse. This is because the whole idea of the new system is for each person to build up a decent pension in their own right rather than having to rely on the contributions of someone else.  

The main exception to this is where the ex-spouse has a particularly large new state pension, in excess of the standard rate. This excess amount is called a ‘Protected Payment’ and in principle this weekly amount can be shared as part of a court order in a similar way to the sharing of additional (old) state pension described above. However, the size of these payments is typically very small.

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