Divorce or separation can bring many financial decisions at an already difficult time. While the family home, savings and everyday finances often take priority, it’s easy to forget another important financial asset — your pension.

For many people, a pension may be one of their most valuable assets, particularly if they have contributed to it over many years.

While your solicitor will guide you through the legal process, understanding what pensions you have and what may happen to them can help you make more informed decisions about your financial future.

Don’t Let Your Pension Become an Afterthought

Your pension is designed to provide an income later in life therefore it can be easy to give it less attention than assets such as your home or savings. However, decisions made during a divorce or separation could affect the income you have available in retirement.

A good starting point is simply understanding what pensions exist and what they are worth. This can help give you a clearer picture of your overall financial position.

What Can Happen to a Pension During Divorce?

Pensions can be considered as part of a divorce or judicial separation in Ireland.

When pension benefits are being divided, a Pension Adjustment Order (PAO) may be required. Put simply, a PAO is a court order that sets out how certain pension benefits should be treated between you and your former spouse.

If several pensions are involved, you may need to consider them separately. This could include pensions from current or previous employers, Personal Retirement Savings Accounts (PRSAs) or other pension arrangements. This might sound complicated, but you do not need to understand all the technical details yourself.

Your solicitor can guide you through the legal process. At the same time, a financial adviser can help you understand the pensions involved and what the different options could mean for your longer-term finances.

Will I Have to Wait for My Former Spouse to Retire?

This is an understandable question, particularly when you are trying to make plans for your own future. The answer will depend on the pension arrangements involved and your individual circumstances.

In some cases, there may be an option for pension benefits awarded to you to be transferred into a pension arrangement in your own name.

Where this is possible, it can provide greater control over your own retirement planning rather than having future decisions tied to those of your former spouse. Everyone’s circumstances are different, so it is important to understand the options that apply to you before making any decisions.

Four Questions Worth Asking

There can be a lot to think about during a divorce or separation. You do not need to have all the answers straight away, but there are a few useful questions that can help you get started:

• What pensions do we have and what are they worth?
• Have all pensions been considered?
• What could this mean for my income in retirement?
• Will I need to make changes to my own retirement plans?

Your solicitor and financial adviser have different roles in this process. Your solicitor can advise you on the legal aspects. At the same time, a financial adviser can help you better understand your pensions and the longer-term financial implications of the decisions being considered.

How We Can Help

If you are going through a divorce or judicial separation and would like help understanding your pensions and longer-term financial position, Stephen Donnelly, QFA RPA at Donnelly Financial Planning, can help you understand the financial picture alongside the legal advice provided by your solicitor.

Our role is not to provide legal advice or tell you what settlement to accept. It is to help you understand your financial position so you can have more informed conversations and make decisions about your future.

Arrange a personal consultation with Stephen at https://dfp.ie/contact/
📧 Email: stephen@dfp.ie

Further Information and Sources

The Pensions Authority
A Brief Guide to the Pension Provisions of the Family Law Acts
https://pensionsauthority.ie/scheme-members-and-prsa-contributors/understanding-pensions/pensions_on_separation_and_divorce

Citizens Information
How pensions are assessed during separation, divorce and dissolution
https://www.citizensinformation.ie/en/birth-family-relationships/separation-and-divorce/sep-divorce-pensions

Additional Reference
Cantor Fitzgerald Ireland
Retirement Benefits and Divorce: What You Need to Know
https://cantorfitzgerald.ie/retirement-benefits-and-divorce-what-you-need-to-know/

This article uses publicly available information from the sources above and provides a simple, general overview of some financial considerations that may arise around pensions following divorce or judicial separation.

Important Information

This article is for general information and educational purposes only and does not constitute legal, tax, investment, pension or personal financial advice.

The treatment of pension benefits following divorce or judicial separation depends on individual circumstances, the pension arrangements involved, and the terms of any relevant court order.

You should seek appropriate legal, financial and, where necessary, tax advice before making financial decisions.

Information relating to a particular pension should also be confirmed with the relevant pension provider, trustees or administrator.

Donnelly Financial Planning Ltd is regulated by the Central Bank of Ireland (Code C523217)