Pension attachment/earmarking allows the courts to make an order stating that part, or all, of the member’s pension benefits must be paid to their ex-partner when they become payable. This excludes the State Pension.
The pension still belongs to the scheme member, but the scheme must make some form of payment to the ex-partner when the member’s benefits become payable.
The court can order that the ex-partner receives one, or a combination, of the following benefits:
- all or part of the member’s pension income (this doesn’t apply in Scotland)
- all or part of the member’s tax-free cash sum
- all or part of any lump sum paid in when the member dies.
Taxable income payable to an ex-partner still belongs to the member, so will be taxed as if it’s being paid to the member.
Payments won’t count as taxable income for the ex-partner and shouldn’t need to be declared as income for tax purposes to HMRC.