Although a pension cannot be immediately cashed in and is held in one party’s sole name – it is on divorce or dissolution treated as an asset that can be divided between the parties. On this web page the expression ‘spouse’ will also mean civil partner.
Before negotiations can take place you will need to obtain a cash equivalent transfer value (CETV) from your pension provider. This is the value of your pension at the date you make the request and the value that your pension would be given if you were able to transfer it to a new pension scheme. If your pension is already in payment you will need to obtain a cash equivalent benefit statement from your pension provider as well as letting us have your last three payment slips.
Once we have ascertained the value of your pension we will then be in a position to consider what your spouse’s claim is likely to be and how this claim can be settled. If your spouse has a pension then this will also need to be valued and taken into account when considering your spouse’s claim against your pension. There is no set criteria or calculation that is applied by the court to calculate your respective pension claims. All the circumstances of the case have to be considered, particularly the length of the marriage.
A summary of the current options available to you and the advantages and disadvantages of each of the options is provided below.
This is where a percentage of your pension is transferred to your spouse. Your spouse then holds a pension in their own name. It depends on the rules of your pension scheme as to whether or not your spouse is permitted to transfer the pension to another pension scheme of their choice, or whether the pension has to stay in your scheme.
A Pension Sharing Order takes effect from the date of the Decree Absolute, or if later, 21 days from the date of the order (unless the order is appealed and in which case the effective date will be the date of the order determining the appeal). The percentage transferred is a percentage of your pension at the date of implementation and not therefore a percentage as at the date of retirement. A pension Sharing Order cannot be made if your divorce proceedings were commenced prior to 1st December 2000.
Advantages of pension sharing:
Disadvantages of Pension Sharing:
This is an agreement for the Pension Sharing Order to be implemented at a future date. This is usually used when the pension is already in payment and your spouse will not be entitled to receive the pension income for some years. If the Pension Sharing Order is delayed it means that you can receive an unreduced pension until such time as your spouse is eligible to receive it. If the pension share is delayed then if necessary an agreement can be reached as to the appropriate level of maintenance to be paid to your spouse. A Pension Sharing order cannot be made if the divorce petition was issued before 1st December 2000.
Advantages of a Deferred Pension Sharing Order:
Disadvantages of a Deferred Pension Sharing Order:
This is where your spouse’s claim to your pension is offset against your capital assets. For example if you own a house – then rather than you give up a share of your pension you can instead agree that your spouse has a greater share of the equity. If the pension is offset then it is usually accepted by the court that a discount should be applied to the amount that would have been transferred under a Pension Sharing Order to reflect the early receipt of the benefit. This is called the ‘accelerated receipt’ or ‘utility’ argument.
Advantages of Offsetting:
Disadvantages of Offsetting:
This is an order requiring you to pay an amount of your lump sum on retirement to your spouse. It is your responsibility to pay the lump sum and not your pension provider’s. The order will simply state the date by which you will need to make the payment.
Advantages of a deferred lump sum:
Disadvantages of a deferred lump sum:
This is an order requiring a proportion of your lump sum, pension income or both of your deaths in service grant to be paid to your spouse. Your pension provider is responsible for making the payments to your spouse. The order has to be expressed as a percentage or fraction and is different to a Pension Sharing Order as it applies to the value of your pension as at the date of your retirement.
Advantages of a Pension Attachment Order:
Disadvantages of a Pension Attachment Order:
Please feel free to contact your local Beeston Shenton office to discuss your own position and concerns.
64 King Street, Newcastle-under-Lyme, Staffordshire, ST5 1JB
Telephone: 01782 662424 . Fax: 01782 662484
Lea House, 5 Middlewich Road, Sandbach, Cheshire, CW11 1XR
Telephone: 01270 750057 . Fax: 01270 759842
The information on this page is for general guidance only and should not be treated as a definitive guide or be regarded as legal advice. If you need more details or information about the matters referred to on these web page please seek independent formal legal advice. This information was correct at the time of going to press in August 2012.
Beeston Shenton Solicitors are regulated by the Solicitors Regulation Authority. SRA No. 420578
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