Pensions can be one of the most valuable assets an individual has and, as such, should always be considered when reaching a financial settlement as part of divorce proceedings.

Pensions can be divided by a pension sharing order or a pension attachment order. Today we will focus on pension sharing as it tends to be the more popular method.

A pension sharing order is one of the various orders that can be imposed by the Court following contested financial proceedings, but will commonly be included in a consent order agreed between the parties outside of Court proceedings usually with the assistance of family lawyers or a mediator.

Pension sharing is popular as it creates a clean break and allows the parties to be financially independent. Death or remarriage of either party will have no effect on the order once implemented.

Pension sharing works by deducting a specified percentage from one parties pension pot (a pension debit) and transferring that amount into their ex-spouses’ pension (the pension credit). The receiving party will need to have a pension fund in their own name for the pension credit to be paid into. Once the transfer has been implemented the money will be legally theirs and can be added to in the usual way. Likewise, they will be able to draw down on the pension once as they reach pensionable age.

The value of the pension(s) will be calculated by the pension trustees who will supply, upon request, a Cash Equivalent Transfer Value (CETV). Family lawyers will negotiate the percentage to be transferred and specify that percentage within the pension sharing order which will be filed at Court for approval and sealing, to make it legally binding. The pension sharing order, once approved, will be provided to the pension trustees who will implement the order. The value of the percentage, in cash terms, is calculated by the trustees the day before the pension sharing order takes effect.

When calculating the available assets available for division, each pension held by the respective parties will be taken into account. This includes workplace or personal pensions and additional state pension but does not include the basic state pension.

If you have been married a long time, or there is not much money to go around, it is generally accepted that all pensions will go into the matrimonial pot and will be available for division.

In cases where there is more than enough money to meet each parties needs it is usual to try and ring-fence a pension which has been acquired pre marriage.

Your respective solicitors will look at the total funds available and calculate how much each party requires from the settlement in order to meet their needs

We can help

There is no set formula for determining how marital assets should be divided, it depends entirely on the circumstances of each case. Financial matters can be completed and have significant financial implications for the future. Should you require assistance with financial matters arising from divorce please do not hesitate to get in touch.

Call Emma Darley on 01522 561020 or email

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