Pensions On Divorce / Dissolution


For some time it has been possible for pension investments to be divided or otherwise taken into account between parties to a divorce / dissolution. There are various ways in which this can be achieved.

Pension Sharing Orders are not available in Judicial Separation cases. If you are intending to petition for Judicial Separation, you should seek particular advice.

In every case, information has to be provided by the pension provider. Commonly, the assistance of a pension actuary or expert is required to value the pension asset.

Pension sharing

This is where a percentage of the Cash Equivalent value of one partner’s pension is transferred to the other, who then holds the pension as their own. The value is assessed at the date on which the Pension Sharing Order is made. The receiving partner may establish (or have already) a pension within the same scheme, or may transfer the benefit to another – external – pension scheme (depending on the rules of the original pensioner’s scheme). The pension provider will levy a charge for effecting the transfer, but this is usually borne jointly (another common approach is for the charge to be borne in the same proportion as the pension share).

A Pension Sharing Order cannot be made if your Petition was issued prior to 1 December 2000.

Deferred pension sharing order

It is possible for a Pension Sharing Order to be deferred so that it will be implemented at a future date. However, this is unusual. If the Pension Sharing Order is deferred, the pensioner will receive a reduced pension until such time as the other partner becomes eligible to receive their share. The receiving party gets no commensurate benefit.

A Deferred Pension Sharing Order cannot be made if your Petition was issued prior to 1 December 2000.

Deferred lump sum

One partner may be directed to pay to the other some or all of the tax free cash sum to which they are entitled on retirement. Any Order requiring this will include an undertaking by the pensioner to take all necessary steps to draw down that cash sum at the earliest opportunity.

Pension attachment order

This is an order requiring the pension provider to pay a proportion of one partner’s tax free cash sum entitlement and / or pension income or death benefit to the other. The order must be expressed as a percentage value of the pension at the date of retirement rather than the date of the Order.

Advice

Solicitors are not able to give detailed advice on pensions. Frequently we refer valuation and actuarial issues to an Independent Financial Adviser or an Actuary to assist in identifying the most efficient way of dealing with pension assets.

How can we help?

  • Liaise with pension providers on your behalf to obtain information about pension entitlements;
  • Identify with you how best to take into account pension assets in your financial settlement;
  • Refer you to suitable individuals qualified to advise on the best way to manage pension assets on divorce / dissolution;
  • Liaise with pension providers on the implementation of any pension sharing or similar order.

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