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How does 'Pension Sharing' work?

How does 'Pension Sharing' work?

Pension Sharing - if a petition for divorce has been filed after the 1st December 2000, it is possible to divide pensions between spouses on divorce. This solution can help to make a clean break possible where previously long-term maintenance would have been contemplated.

Disadvantage: If you have part of a pension transferred to you, will you be able to afford to make additional contributions yourself - are you as able to make contributions as your spouse who has the pension rights originally?

For example: " If we divide the proceeds of the house sale and if I get part of your pension now, then we can be independent; I will be able to afford a house and will have enough to live on when I retire without asking for maintenance".

Pension sharing does not have to mean a 50/50 split. The share that the non-entitled party receives will have to be expressed as a percentage, but this can be anywhere between 0 and 100% depending on what is appropriate in the circumstances. The percentage will bite on the value of the pension scheme when the share is made. It is therefore difficult to predict exactly what value will be transferred into the name of the spouse, and how much will be left.

Before the court will consider making a pension sharing order (even by consent) it needs to have a significant amount of information about the scheme in front of it. It may take a while to obtain all of this information, as pension providers tend to move quite slowly, so it is worth you and your legal advisors turning your minds to the matter early on.

In most circumstances, the spouse who receives the pension share will have the choice as to whether to leave the pension where it is or transfer it to a scheme of her choice. However, some schemes insist on the recipient transferring out. A disadvantage of leaving the pension where it is may be that you are not allowed to make further contributions to it, whereas if you transfer out you can treat the pension exactly as if it were yours from the start and keep adding funds.

Despite the fact that it is an extremely useful tool on divorce, pension sharing is a tricky area of law.

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