Pension Sharing Orders
Also known as a PSO, a pension sharing order is a court-issued order that states exactly how your pensions will be divided after your divorce. We understand how important it is to set out legally binding agreements about pensions, and we are here to make sorting out your pension sharing order as simple as possible.
The Pension Sharing Process
Because your pension is an asset, just like savings and property, you must include it when calculating your total worth.
During divorce negotiations, you must both obtain a valuation of your partner’s pension that is no older than 12 months.
When working out the value of each pension fund, all funds are considered. This means that even if your pension was built up before your marriage or civil partnership, it will still be included in the pension share calculation.
How Pension Shares are Calculated
Exactly what percentage of the transfer value of the pension you or your former spouse is entitled to, is decided by the court, and this is based on the total value calculated the day before the pension sharing order takes effect.
If you require a pension sharing order you must involve the court. Pension providers cannot transfer or divide any part of a pension without this kind of court order.
Offsetting a Pension
If a pension sharing order isn’t right for you, the main alternative is called offsetting.
With this option, you can offset the value of the pension against other assets, such as the value of the family home. It is a relatively straightforward option and helps you achieve a ‘clean break’, the same way a pension sharing order would.
Receiving a Pension Share from Your Ex
You don’t need to be a member of the same pension scheme as your ex-partner to receive a share of their pension.
If you are receiving your pension share on another scheme, under your name, this would be referred to as an external transfer. If you are a member of your ex-partner’s scheme, it’s called an internal transfer.
Pension Transfer Timeframes
Even though you may have already calculated and agreed on the pension sharing order, it won’t come into effect until the decree absolute is granted and your divorce is finalised.
After receiving confirmation that you are divorced, the pension provider has four months to transfer the funds into the correct account.