Cohabitation has become an increasingly common form of family life in the UK, yet the legal framework governing the rights of cohabiting couples – particularly in relation to pensions – is often misunderstood, says The Estate Registry, which provides a suite of end-of-life admin services including InheritNOW, and bereavement notification services NotifyNOW and Settld.
Howard Enders, chief operating officer at The Estate Registry says: “Unlike married couples or those in civil partnerships, cohabitants do not benefit from a comprehensive legal regime that automatically protects their financial interests upon separation or death. This disparity is significant when considering pension rights, which are often one of the most valuable assets accumulated over a lifetime.”
One of the most persistent misconceptions in the UK is the idea of the ‘common law marriage’. Many people believe that living together for a certain number of years grants them similar rights to married couples. In reality, no such legal status exists.
Cohabiting partners are treated as separate individuals in most areas of law, including pensions. This means that, unless specific arrangements are made, one partner may have no entitlement to the other’s pension, regardless of the length or nature of the relationship, as a recent media report suggests.
Pension rights for married couples and civil partners are relatively well protected. In the event of divorce, courts have wide powers to redistribute pension assets through mechanisms such as pension sharing orders or pension attachment orders. These tools allow for a fair division of retirement savings, reflecting the joint contributions, financial and otherwise, made during the relationship.
Cohabiting couples, however, do not have access to these remedies upon separation. If a cohabiting relationship ends, each partner typically retains their own pension, and there is no legal obligation to share it.
The situation becomes even more complex upon death. For married couples and civil partners, there are often automatic entitlements to survivor benefits from occupational or private pension schemes.
“In contrast,” says Enders, “cohabiting partners may only receive such benefits if the scheme’s rules allow for discretionary payments to dependants. Even then, the surviving partner may need to provide evidence of financial dependency or a long-term relationship, which can be both burdensome and uncertain.”
State pensions also highlight the disparity. Historically, spouses could benefit from their partner’s National Insurance contributions, particularly if they had lower earnings or had taken time out of the workforce for caregiving.
Cohabiting partners, however, cannot rely on their partner’s contributions in the same way. Each individual’s entitlement to the State Pension is assessed independently, which can disadvantage those who have sacrificed career progression for the benefit of the household.
Given these limitations, cohabiting couples must take proactive steps to protect their pension rights. One important measure is checking the rules around pension nominations and, in addition, ensuring that nomination forms are up to date.
Most pension schemes allow members to nominate a beneficiary to receive death benefits, and failing to do so can result in the benefits being distributed at the discretion of the scheme trustees. Clear nominations may improve the likelihood that a cohabiting partner will be provided for.
Additionally, cohabiting couples may consider entering into a cohabitation agreement. While such agreements cannot replicate the full range of rights available to married couples, they can set out intentions regarding financial arrangements, including pensions. Although courts are not bound to enforce these agreements in the same way as divorce settlements, they can carry persuasive weight in legal disputes.
Another practical step is making a will. Without a valid will, the rules of intestacy apply, and cohabiting partners are not recognised as beneficiaries under these rules. This means that, in the absence of a will, a surviving partner could receive nothing from the deceased’s estate, including any pension death benefits not governed by scheme rules. A properly drafted will ensures that a partner’s wishes are clearly documented and legally recognised.
There have been calls for reform in this area. Legal bodies and advocacy groups have argued that the law should better reflect the realities of modern family life, where cohabitation is often a long-term and committed arrangement.
Proposals have included granting cohabitants certain rights after a qualifying period or where there are children involved. However, to date, significant reform has yet to be implemented, leaving many cohabiting couples vulnerable.
Enders concludes: “In conclusion, while cohabitation is increasingly common, the legal protections available to cohabiting partners – particularly in relation to pensions – remain limited and at the employers’ discretion. At The Estate Registry, we would advise cohabiting couples to undertake individual planning and check the rules under their company pension schemes to secure their financial future.
“Understanding these limitations and taking appropriate steps, such as updating nominations and making a will, is essential to mitigate the risks and ensure fair outcomes.”
This article was submitted by The Estate Registry as part of an advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
