In this article, we’ll explain what a pension sharing order is and how it fits in to the financial settlement upon divorce.
A pension sharing order states how much of your pension your spouse will receive as part of the divorce settlement. A pension sharing order is used when a couple decide to share pensions upon divorce.
Granting a pension sharing order has been possible since December 2000.
A pension sharing order enables a couple to have a clean break.
For many couples, pensions are one of the most valuable assets, after the family home. As such, they often make up a large part of divorce financial settlement negotiations.
This is why it is important to seek legal advice regarding a possible pension sharing order – and the financial settlement as a whole – as early on as possible in the divorce process.
A pension sharing order enables one spouse to receive a percentage of the other spouse’s pension/s upon divorce. Pensions are valued for the purposes of divorce on their cash equivalent value.
The percentage of the pension (as detailed in the pension sharing order and known as “pension credit”) is then either:
• transferred into an existing pension (in the receiving spouse’s name)
• transferred into a new pension (again, in the receiving spouse’s name) or
• transferred into an extra pension in the ex-spouse’s pension scheme
No, a pension sharing order does not necessarily have to include a 50/50 division of a pension. If an agreement cannot be reached about what the division of the pension/s should be, the court will determine how the pension/s will be divided, taking into account the assets and finances of both spouses.
A pension sharing order will not be appropriate for everyone. It is just one available option. This is why it is highly recommended that you seek legal advice from a solicitor experienced in this area of law, such as Austin Kemp, so you can make an informed decision about which option is best for you.
A pension sharing order cannot be enforced until it comes into effect. A pension sharing order will come into effect on whichever is later of either:
• the decree absolute being granted or
• 28 days after the date of the pension sharing order
Yes, a pension sharing order can be reversed in some circumstances. However, there is a strict time limit. As always, seek advice from a solicitor experienced in this area of law, such as Austin Kemp, to find out if reversing a pension sharing order may be possible in your circumstances.
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