Substitution – The Forgotten Aspect of Pensions When Divorcing

The vast majority of readers won’t remember using the substitution method for algebra at school but even less readers will be aware of the substitution rule for pension age divorcing couples.

Pensions are one of the many things disclosed when straightening out financial matters within divorce procedures.

If a person has reached state pension age prior to 6th April 2016, so that they fall within the old state pension scheme, it is usually possible for them to adopt the National Insurance record of their former spouse, for the years they were married or in a civil partnership, until they divorced or dissolved the civil partnership to boost their entitlement to the basic state pension. This is called “substitution”.

This enables the person without sufficient qualifying years on National Insurance payments or National Insurance credits, to substitute their former spouse’s National Insurance record to their own. The former spouse does not lose out in any way and their record remains unaffected. It’s a win-win situation and one that is important to consider.

A second marriage will only affect the substitution if the person does not claim before they remarry, and in this case they lose the right to the substitution. If they claim before they are married the substitution will not be reduced or lost when they do remarry.

Generally, substitution is not available for those that reach the state pension age on or after 6th April 2016, consequently consideration will need to be given to this during divorce or dissolution as it could have a significant impact on the former spouse who hasn’t achieved their 35 years of National Insurance contribution.

It’s important that financial, pension and legal advice is obtained when seeking a divorce. The Family Law team at Wilson Browne Solicitors is one of the most established teams in the area. Recognised by the Legal 500, a Who’s Who in the legal profession.