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Divorce law blog

Top ten tips for pension sharing

12/06/2013   By: Nigel Shepherd

It is now commonplace that one or both of a divorcing couple will have a pension fund, which could be shared as part of any financial settlement. Pensions are complicated and mistakes in splitting them are well publicised, so it’s important to get expert advice to make sure you don’t lose out..

Here are our top tips:

  1. A pension share is available only when it’s a marriage or civil partnership that is coming to an end. It’s not an option for couples who have just been living together.
  2. In most cases, a separating couple can agree and put into effect whatever financial agreement they wish without having to divorce and get a formal court order. A pension share is the exception to that rule: there must be a divorce and an order.
  3. When negotiating a pension share, always try to work off the most up to date valuations as they can change quickly. Be aware, however, that no matter how up to date the valuation is the way pension sharing works will almost always mean that what you actually get will be a little different to what you planned. This is because of the period of time between agreeing the figures and the pension scheme actioning the split, called the ‘moving target syndrome’. Getting the most up to date values helps minimise this though.
  4. A great number of final salary pension schemes are suffering from chronic underfunding and may be in financial difficulty. Enquiries should always be made to see if the pension has transferred to the Pension Protection Fund as this can have a big impact on what you might get and how you go about it.
  5. Send the standard Form P off to all pension providers before you start negotiating to make sure you and your solicitor have all the important information about the pensions that you need.
  6. Some pensions such as Self Invested Personal Pensions (SIPPs) or Small Self Administered Schemes (SSASs) may assets such as commercial property in them. It is important to consider when and on what basis those assets were last valued to ensure that the pension value you are working on is fair. You are likely to need expert help.
  7. Check whether the pension scheme charges for information. Some information has to be provided free but not all of it. When it comes to the costs of carrying out the pension share charges vary widely. For example the NHS scheme currently charges £2,904. You should also agree at an early stage who will be paying the pension sharing charges. Are they to be paid by one of you, split equally or split in different proportions? This needs to be clear in the court order you get.
  8. With some schemes such as Civil Service and the NHS the pension share you get will result in you becoming a member of that scheme in your own right. With personal and most other pensions you will need to have the amount you’re getting transferred into your own separate pension. That means that you will need advice from an IFA or other pensions expert.
  9. Remember that pension sharing is only part of the picture when it comes to sorting out your finances on divorce. A pension isn’t the same as cash in the bank or property. Consider whether you might be better having a bigger share of any other assets instead of the pension. And finally…
  10. Get expert legal advice from a family lawyer who understands the complexities and can work in partnership with other financial specialists to make sure that you get a fair deal. It’s your future financial security that is on the line.

See our Pensions and pension sharing video for more information on pensions on divorce.

Nigel Shepherd
Family Law Partner

  • lynn goodier 4 years 23 days ago
    I was awarded a pension sharing order on my divorce in 2005, I was told I could not do anything about this until I reach 60, which will be Dec this year 2015. The Company holding the pension has asked for fees for the following: to examine a court order, a further fee to implement an order and another to alter each policy. They also need details of the scheme who will be receiving the pension credit for me (I don't understand this) My ex's current address (which I do not know) and that he is not bankrupt (again I do not know)...I am totally confused about what I am supposed to do, and how it works - do I receive a lump sum, of part lump sum and the rest to be held in a pension pot...I would be much obliged if anyone can shed some light on this for me
    • Nigel Shepherd 4 years 21 days ago
      Thank you for your enquiry. It is essential that you get expert advice on what could be quite a complicated situation. We would need more information about the position in order to be able to assess the position and advise. Please contact one of our team direct if you would like to discuss how we might be able to assist. You can contact us on 0344 880 2966.
  • Linda Downer 4 years 90 days ago
    I am 58 and divorcing my husband who already receives his local government pension. Is there any way that I can start getting a percentage of his pension before I retire? Also I will get a small private pension and lump sum at the age of 60. If I divorce him before 60 can he have a right to some of my lump sum?
    • Jane Booth 4 years 87 days ago
      Thank you for your comment. The court has a wide discretion in relation to finances on divorce. It has the option, in the appropriate cases, to make pension sharing orders. This can be when the pension is in payment or prior to the pension being in payment. The appropriateness of a pension sharing order, or division of the lump sum, will depend on the particular facts of your case. I recommend that you seek advice from one of our specialist family lawyers in relation to your case.
  • John Rodgers 4 years 261 days ago
    I have a armed forces pension and a NHS one, my ex is claiming 22.3% of armed forces can i change that to 58.66% of the NHS one and does it make a difference somehow i feel my armed forces one is better
    • Nigel Shepherd 4 years 260 days ago
      Thank you for your enquiry. In view of the nature of your pensions and their likely importance to your future financial security you need to be very careful about agreeing any division without getting specialist advice from a family lawyer that has experience in this area. It is likely that some guidance from a pensions expert (IFA or actuary) might also be required to look at the various options and implications. For example we would need to know whether either or both of the pensions is already in payment, what the transfer values are and the position with yours and your ex’s other assets, ex’s income and expenditure etc. Pensions are unfortunately often misunderstood in divorce proceedings. It is important to recognise that a pension is a different kind of asset to a house or money in the bank. Please do get in touch if you would like to discuss how we might be able to help you.
      • John Rodgers 4 years 260 days ago
        Both pensions are in payment the NHS one is a ill health retirement tier 2, I am unable to work. I have a family law solicitor who has not advised me to seek any further advice but to except the amount calucated. My ex does work full time and is 5 years younger than me, I think I should see someone as a matter of urgency as my solicitor says it will cost me if it goes to court and I should not delay.
        • Nigel Shepherd 4 years 258 days ago
          Thank you for the further information. The position is clearly complex and if you would like to explore how we can help further on a formal basis then please call Andrew Moore on 0161 235 5431. Unfortunately it is not possible for us to give specific advice online.
  • Paul Gray 5 years 70 days ago
    Hi, I was divorced 5 years ago with a pension sharing order on my civil service pension of 25+ years. When calculating the percentage they took into account the two years we had lived together. I note from number 1 above this shouldn't be. Can I challenge this?
  • Paul Gray 5 years 70 days ago
    Hi, I was divorced 5 years ago with a pension sharing order on my civil service pension of 25+ years. When calculating the percentage they took into account the two years we had lived together. I note from number 1 above this shouldn't be. Can I challenge this?
  • Christene Loweth 5 years 282 days ago
    Not sure how the law stands, I have a separation agreement signed by my ex stating we were entitled to a half share of each others pensions, both his pensions are more valuable than mine, but the agreement was signed here i New Zealand. I have not lodged a Pension Sharing in the UK courts and have asked my NZ solicitor to follow through on the agreement. I do not communicate with my ex. What do you advise is the best option, his pension providers will not inform me as to whether he is drawing the pensions, or has transferred the funds to a scheme here in New Zealand Regards Christene Loweth
    • Sue Brookes 5 years 282 days ago
      Thank you for your enquiry. In order to implement a pension share in this country following a separation agreement in New Zealand, you will need to apply to the English court for a pension sharing order. As you are concerned about the current status of his pension, the priority must be to clarify the position. Please contact Sue Brookes on 00 44 161 235 5423 or sue.brookes@mills-reeve.com to discuss how you do that, what steps you may be able to take to protect yourself and how you make an application for a pension sharing order in more detail.

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