Panay Vassiliou of Kangs Solicitors outlines what a Pension Sharing Order is within divorce proceedings.
We regularly advise clients in relation to complex financial settlement proceedings and can be contacted for an initial no obligation discussion at any of our offices detailed below:
What Is Pension Sharing? | Kangs Divorce Solicitors
Pension sharing is the method by which an existing pension arrangement is divided between the parties following divorce or dissolution proceedings.
Pension sharing introduces the concept of pension credits and pension debits. The person with pension rights loses a percentage of their fund’s value, which is transferred (the pension debit) upon pension sharing. The ex-spouse or civil partner receives the percentage transferred (the pension credit) and they gain pension entitlement in their own right, the benefit of which they receive when they retire.
The pension credit can be transferred or invested in the same pension scheme (internal transfer) or a new pension scheme (an external pension). It is vital that advice is taken as to the options available. It is often the case that a pension’s actuary will need to be instructed to advise as how best to divide the pension.
Welfare Reform and Pensions Act 1999 | Pension Sharing Legal Advice
The power to make Pension Sharing Orders was introduced by the Welfare Reform and Pensions Act 1999.
Pension sharing was extended to the dissolution of civil partnerships for same sex couples following the introduction of the Civil Partnership Act 2004, which came into force on 5 December 2005.
Key Features Of Pension Sharing | Kangs Pension Sharing Advice Solicitors
- Divorce proceedings must have been commenced after 1 December 2000 for a Pension Sharing Order to be made.
- The creation of a separate pension fund for the recipient supports the court’s clean break principle.
- The pension credit provides the recipient with security and control regardless of the death of the transferor and the recipient’s financial security is not linked to the date that the other party (transferor) chooses to retire.
- The pension credit remains with the recipient following any subsequent marriage or civil partnership.
- The recipient is able to make a nomination under the new pension arrangement to benefit a person of their own choosing in the event that they die before taking their pension benefits.
- A Pension Sharing Order can only be made by the court as a result of contested financial proceedings or if the parties mutually reach an agreement and present a Consent Order for the court’s approval.
- A pension can be split before or after it is in payment.
When Does A Pension Sharing Order Come Into Effect? | Family Law Lawyers
A Pension Sharing Order:
- can only take effect on the final order of decree of divorce/dissolution,
- comes into effect twenty eight days after the approval of the Consent Order and subject to the decree absolute.
How Is The Amount Of The Pension Sharing Order Shown? | Family Law
A Pension Sharing Order can only be shown in percentage terms as opposed to a specific amount.
Is Pension Sharing Appropriate In All Cases? | Kangs Solicitors
If the parties are relatively young, and the pension values are of little value, the costs involved in determining a Pension Sharing Order may outweigh any significant benefit. This is because the implementation charges of the Order and any pension actuary advice can be significant.
The other option is to consider ‘off-setting’ any rights to a Pension Sharing Order when dividing the capital assets.
How to Contact Us | Kangs Family Law Solicitors
We advise clients in relation to divorce and financial settlement proceedings with our solicitors experienced in dealing with financial settlements ranging from multi million pounds to more modest sums.
We seek to work proactively with our clients in an effort to secure an early favourable financial settlement.
We welcome new enquiries by telephone or email.
Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.
For initial enquires please contact: