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When it comes to a divorce, one of the biggest assets is often a pension. Since 1st December 2000, the court can grant a pension sharing order against either party giving shared rights to the pension through a legal arrangement.

But what is a Pension Sharing Order (PSO) and how can it affect you? Let’s take a look:

The Pension Sharing Order Process

If a marriage has come to an end and one partner is left without a pension entitlement, then a PSO distributes the assets that are held within an existing pension. Pension Sharing Orders allow a clean break between parties and make the need to start a new pension redundant.

As part of a divorce process, assets within a marriage are assessed and divided between the couple. Pension Sharing Orders mean that these assets also include the monetary value of any pensions – this allows for one party to get a percentage of the total value of the other person’s pension in the split.

Instead of earmarking this money for retirement, the pension is split using pension credit which can be transferred into an existing pension, a new pension or an extra pension in an existing scheme.  

Do Pension Sharing Orders create a 50/50 split?

No, there is not a legal requirement for a PSO to be split equally and if an agreement cannot be reached the courts will have to determine the percentage split. This will be done after considering the other assets and finances of each party.

Regardless of whether an agreement is reached, it is not possible to divide the pension arrangements without going to court. This is because the pension provider or scheme cannot act to divide a pension arrangement without a direction from the court. You are, however, able to split matrimonial assets between the parties by having the decision recorded with solicitors without the need for court.

Can PSO happen after a divorce is final?

Yes, the pension sharing order process is separate from the divorce itself and can therefore happen after the divorce is final. However, a pension sharing order cannot be made until a decree absolute has been granted.

Is Pension Sharing compulsory?

No. PSO is one of several options available to you during ancillary relief proceedings used to divide the pension arrangements. There may be more appropriate options for you depending on your situation – your solicitor will be able to advise you towards the best solution for you.

A court may decide to ignore dividing a pension if the couple are still young, were only married for a short time or the value of the pensions is too low to justified the costs associated with a PSO.

How is the value of benefits expressed?

The court will split the pension as a percentage value of the overall pension fund.

What happens if one party remarries or dies?

As Pension Sharing Orders create a clean break between the parties on divorce, there are no consequences for the ex-partner if their former spouse remarries or dies. Once the pension arrangements have been made, no further claim can be made on the pension rights.

If you’re going through a divorce and want to know more about your options then talk to Howells Solicitors today. With years of experience in divorce proceedings, we can advise you on the best course to take when it comes to pension sharing.

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