Labour has announced plans to give co-habiting couples who are not married similar property rights as those who are, if they are successful at the next election, which could have a knock-on effect for pension sharing, offsetting and earmarking, AJ Bell has stated.

Under the plans, property rights for co-habiting couples who live together for a set number of years would be extended so they were similar to those who were married or in a civil partnership.

AJ Bell head of retirement policy, Tom Selby, noted that while most people think of ‘property’ as housing, the term usually covers investments and retirement pots.

He added that, in many cases, people’s pensions will be the single largest asset they own, and having to share that asset would become a “significant consideration” when making decisions about co-habiting if the reforms were introduced.

Currently, there are three ways in which pensions can be split at divorce, which could all be affected if the changes were enacted: Sharing, offsetting and earmarking.

People’s rights to their partner’s pensions could be extended beyond those who are married or in a civil partnership and get a divorce to those who have co-habited for a set number of years and split up.

“Extending property rights to co-habiting couples who live together for a set number of years would be a huge change,” Selby commented.

“For anyone who is part of a co-habiting couple and has fewer assets to their name than their partner, it could mean extra security and less financial pressure to marry or enter a civil partnership. For those with more assets than their partner, it would be another factor to consider when choosing to share a home.

“Details of how this policy would operate will be crucial. In particular, Labour needs to spell out whether shared property rights would be exactly the same for co-habiting couples as those who are married and in civil partnerships, and determine after what time period of co-habiting shared property rights would kick in.”

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