Pension Sharing in a Consent Order
Pensions are considered assets as part of a divorce, but only the percentage of the pension acrued during the marriage. Any pension accrued outside the marriage does not need to be included as a marrital asset.
If your pension was accrued during the marriage, you can pay part of it to your former spouse either by a Pension Attachment Order or a Pension Sharing Order. The Court must grant these orders.
A Pension Attachment Order would divert part of your pension benefits at retirement age to your former spouse, but their entitlement would cease on your death.
A Pension Sharing Order would allocate part of the value of your pension benefits, to your former spouse. Your former spouse will use this pension credit to buy pension benefits for themselves. They can buy credit within the existing pension scheme or go to an alternative pension provider.
How Does Pension Sharing Work?
If you decide to opt for pension sharing on your divorce, the Court will issue a pension sharing order. This order will state how much of your pension, your ex-spouse is entitled to receive. Their share will usually be expressed as a percentage of the value of the pension.
This pension sharing order is sent to the pension provider. They will value the benefits and reduce your pension benefits by the percentage stated in the order. The pension provider will value and reduce the pension from the date specified in the court order.
Your ex-spouse will have the option of taking their share to buy pension benefits in another approved pension arrangement or to buy pension benefits within your pension scheme. The pension provider will charge you to implement the pension sharing order. Your spouse will also have to pay to set up a new pension fund. The charges will vary from one pension provider to another. Whatever option they chose, their pension will be completely separate from yours. Their pension would continue after your death as the fund would be completely separate from your benefits.
How Much Do I Need To Share?
How much of your pension you should share or whether you should share it at all, depends on the size of the matrimonial asset. There is no one size fits all. The first step is to find out the Cash Equivalent Transfer Value (CETV) of the pension. Your pension provider will be able to tell you the value. You will then work out what a fair settlement is taking into account all the assets that you have built up during your marriage.