Pension Sharing Orders in Divorce Explained

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When dividing assets in a divorce, pensions can often be one of the largest matrimonial assets. Because it’s such a valuable asset it can problematic deciding who is entitled to what.

So it’s important to know your rights to your partner’s pension, and equally what their entitlement may be to yours.

For initial legal advice get in touch with our Divorce Solicitors.

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What is a Pension Sharing Order?

A Pension Sharing Order is a legal way to divide up a pension between spouses in a divorce or dissolution of their civil partnership.

Before December 2000, when Pension Sharing was introduced, a spouse who hadn’t worked during the marriage was usually left with no pension entitlement whatsoever. Pension sharing now allows a couple getting a divorce to divide up any pensions between them, or create a new pension for the other spouse under what is known as a Clean Break Order.

How are Assets Split in Divorce?

In England or Wales when a couple gets a divorce and they can’t agree on how to divide their financial assets, the Court can decide for them.

Since the introduction of Pension Sharing in December 2000, pensions must be included in a divorce settlement, and are part of the total value of marital assets you share with your spouse.

There are three options available for a division of pensions as part of divorce:

  • Pension Sharing – A formal agreement that divides pension assets at the time of the divorce.
  • Pension Offsetting – There may well be other assets that the value of the pension can be offset against. This can include property or cash of the same value as the pension.
  • Pension Earmarking – One person receives all, or part of the pension, to be paid to one person when the other person starts to draw pension benefits.

Matrimonial assets are everything owned by one or both of the couple. If one of them applies to the Court for an Order to split that asset, the Court will decide.

Pensions are a matrimonial asset and can be divided in a number of ways. One way is with a Pension Sharing Order.

How Does a Pension Sharing Order Work?

A Pension Sharing Order will give each person a right to part of a pension pot. This could be one pension if only one of the couple was working and the other was looking after the children or both pensions.

Any part of a pension received under a Pension Sharing Order can be transferred to a new or existing pension scheme or stay in the original one. The only pension schemes that cannot be shared are the Basic Pension and the new State Pension.

Issues can arise around the value of a pension, but our Divorce Solicitors can make sure that your pension is correctly valued by an actuary or a pension advisor. The value of the pension will be expressed as the cash equivalent value, also known as CEV.

How to Get a Pension Sharing Order

Only the Court can make a Pension Sharing Order as part of a Financial Remedy Order, either by agreement with your partner or by going to Court. A Pension Sharing Order will take effect from the date of your Decree Absolute. The pension provider has four months from that date to implement it.

To make sure you get the best possible financial outcome from your divorce, it’s crucial to be properly advised when splitting matrimonial assets such as pensions.

Our specialist Divorce Solicitors can give you a clear picture of how your financial assets will be affected by your divorce. We know it’s a tough time, but we’re here to listen and help calm the waters, seeking out the best outcome for all involved.

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