Dealing with pensions in divorce

A pension sharing order is an order from the court for your pension to be shared with your ex. The detail of the pension share is set out in Form P1, which is attached as an annexe to any court order. The Form P1 details what percentage of the relevant pension should be shared. A pension sharing order is the most popular and favoured way to deal with pension sharing on divorce, but there are other options such as offsetting and pension attachment orders, which your lawyer will discuss with you if appropriate.

When the court makes a pension sharing order, the pension provider will need to implement the order. The provider may charge a fee to implement the order, which will often be a few hundred pounds. The specific amount will vary between providers so you should find out what the fee is before reaching a financial settlement. The implementation fee will usually be equally shared between you and your partner, but one of you may offer to pay for the report if you're in a financial position to do so.

There are specific regulations that set a timetable for the implementation of a pension sharing order. However, this could be delayed for various reasons, including one party not providing sufficient details to the provider to begin implementation, or administrative delay on the part of the pension provider.

It's important for a pension sharing order to be implemented as soon as possible. This is because the nature of pensions means that the value could increase or decrease in a short space of time.

If you have concerns that a pension sharing order has not been implemented or there have been delays to the implementation, then you should seek legal advice on what can be done.

Pension sharing orders need to be formally applied for and approved by the court. This can be done by completing a Form A and sending this to the court (together with the court fee).

Completing a Form A means you're asking the court to deal with your dispute. A court timetable will be put in place and will follow a series of steps and hearings that both you and your ex will need to comply with or attend. Before completing a Form A, you should speak to a specialist family lawyer to understand the options open to you.

Many couples do come to an agreement about splitting their pensions outside of the courtroom. This means they only need a consent order from the court, which approves that agreement. Either way, without a court order, the pension scheme provider is unable to implement a pension sharing order.

Although a pension sharing order can’t take effect until the decree absolute or final divorce order is granted, the pension scheme provider then has another four months to implement the order. This time starts running from the day the pension sharing order takes effect or the day the provider receives all the information it needs to implement the share (if that’s later).

In England and Wales, all the pension assets belonging to a couple are considered. Whether these pensions are to be shared with your ex will depend on the other resources available in your case, and both of your respective needs.

Pension sharing orders are available for schemes where pensions are already being paid out, taken or drawn down. You may find the process a little more complicated and the fees charged could be higher.

This is a little tricky because the answer depends on when you reached state pension age.

If you reached state pension age before 6 April 2016, then your state pension comes in two parts – the basic state pension and the additional state pension. You may have built up entitlement under both or just the basic state pension. The basic state pension cannot be shared. However, the additional state pension can be shared.

If you reached state pension age on or after 6 April 2016, you have a “new” state pension. This can‘t be shared. However, if you benefit from a “protected payment” (this is an extra payment on top of the full state pension), that can be shared.

When you divorce, it's important to deal with the financial arrangements at the same time and have a legally binding financial settlement. If you don't, your ex could be entitled to claim a share of your assets many years after your actual divorce, and this would include your pension. 

Pensions can be worth a significant amount, but ring-fencing a pension can be very difficult  You could use a pre- or post-nuptial agreement and agree how your pensions are going to be dealt with if you divorce. 

Alternatively, if keeping your pension intact is important to you, you might be able to negotiate that as part of the financial settlement. It is possible for you to "buy-off" your ex's claim over your pension. This is called "off-setting" and involves substituting other capital for the pension.

As a general rule, the English court doesn’t have jurisdiction to make pension sharing orders in regards to overseas pensions unless the court is satisfied that an English pension sharing order would be implemented and enforced by the relevant pension provider. For this reason, it’s critical to obtain local advice in the jurisdiction where the pension is held at an early stage. If necessary, it may be possible to obtain a local order to enforce any pension sharing order that has been agreed during the English proceedings.

If it’s not possible to obtain a local order in the relevant country, the existence of pension rights overseas is an important aspect to be considered by the court when determining financial proceedings. There are other options that can be explored, such as offsetting the pension against other assets or obtaining a maintenance order to ensure that pension monies are paid to you. It’s important to note that, unlike in England, there's no regulated process for valuing an overseas pension. This is a complex area of law; so it’s important to seek appropriate legal advice.