In July 2019, the Pension Advisory Group (PAG) published a report outlining the treatment of pensions following divorce. Pensions are difficult to value and difficult to divide. A divorce pension sharing order is a solution, but what is it?

Divorce Pension Sharing Order Explained

Divorce Pension Sharing Order Explained

A divorce pension sharing order will state what percentage of your pension your ex-spouse will receive.

A divorce pension sharing order (PSO) is a court issued document, which states how much of your pension your ex-spouse is entitled to receive following a divorce or dissolution of a civil partnership.

The court order will state, in percentage terms, how much will be transferred to your ex-spouse. This could be 10 per cent, 25 per cent, 50 per cent and so on.

Once the transfer amount has been decided, the court will need a separate form – Form P1 – to be completed and attached to the order.

Form P1 should contain the necessary information needed to validate the divorce pension sharing order, which includes:

  • Full names
  • Dates of birth
  • National Insurance numbers for both parties
  • The pension plan or policy number
  • The address of the pension provider
  • The name of the person responsible for administering the PSO

Most importantly, Form P1 should set out the charges to be made by the pension provider and who will be paying them

Once the pension provider is in receipt of all the necessary documentation, they have four months from either the day of the Decree Absolute or, if later, seven days from the expiry of the time limit for appealing the PSO – typically 21 days – in which to implement the PSO.

Is a Divorce Pension Sharing Order the Best Option?

Deciding on a pension sharing order ahead of a divorce

A divorce pension sharing order is a ‘clean break’ option.

The PAG describes pension sharing as ‘a clean break between parties, as pension assets are divided immediately, with each party able to decide what they do with their share independently.’

In its July report, the PAG stated that ‘the overall aim in divorce financial remedy cases is to achieve fairness between the parties’.

However, in difficult cases the input of a ‘pensions on divorce expert’ (PODE), also known as a Pension Actuary, may be required, whether a case is contested or not.

Is Divorce Pension Sharing Fair?

Is divorce pension sharing fair

Divorce pension sharing represents a fair solution for both parties.

Pension sharing was introduced in December 2000. Before pension sharing, a spouse who had not worked during their marriage, faced being left without a pension.

Divorce pension sharing means that pensions are included in the total value of marital assets, reducing the risk of a spouse being left without a pension following divorce or the dissolution of a civil partnership.

As a result of pension sharing being introduced, a spouse can now receive a percentage of the total value of the other spouse’s pension.

The money received is known as a pension credit and can be transferred into a new or existing pension scheme or sometimes you can opt to leave it in the original pension scheme.

Pension sharing does provide a fair solution.

Help and Advice for Divorce Pension Sharing Orders

To discuss a divorce pension sharing order in more detail and for expert legal support and advice, talk to Holland Family Law.

Call us on 0116 436 2170.