Pension sharing on divorce

For most people who are trying to reach a financial settlement in a divorce or civil partnership dissolution, the pension benefits belonging to either or both parties will be amongst their most valuable assets.

As a consequence, pension sharing may be considered as an option as part of the financial settlement.

A step-by-step guide to pension sharing

  1. Make a valuation request

    Requests for valuations must be made in writing. If the request is for a Cash Equivalent Transfer value, you’ll need to provide the date of marriage or civil partnership and the date of separation. These dates aren’t required when the member already receives a pension and the request is for a Pensioner Equivalent Transfer Value.

    The request must also clearly specify that it is for the purposes of divorce or the dissolution of a civil partnership.

    Note: To calculate pension values, SPPA will need information from third parties such as employers and HM Revenue & Customs. This process can take up to three months to complete.

  2. Valuation

    Before any sensible financial agreement can be reached, a valuation of the pension benefits must be made. For the unfunded public sector schemes managed by SPPA, valuations are either done on a Cash Equivalent Transfer Value basis where benefits are not yet in payment or on a Pensioner Equivalent Transfer Value basis where the member has already started taking benefits from the scheme. These notional valuations are calculated using a set of factorial tables and formulas supplied by the Government Actuary’s Department.

  3. Advice

    Pension sharing can be complicated. It’s always best to get expert legal and financial advice while exploring the possibility of pension sharing.

  4. Consider the fees

    Due to the complexity of the work involved, producing valuations and creating pension sharing agreements attract a range of fees payable to SPPA. Our current fee schedules for this type of work are clearly detailed in the application forms.

  5. Create a pension sharing agreement

    If you decide that a pension sharing agreement is the best way to proceed in your divorce or dissolution settlement, you’ll have to:

    - provide a copy of the Extract Decree or Dissolution Order

    - supply your Pension Sharing Order, including the information required by the Pensions on Divorce (Provision of Information) Regulations 2000 Section 5

    - pay the administration charges for implementing the Order.

    Note that submitting a draft copy of the Pension Sharing Orders or Qualifying Agreement before finalising the divorce can save considerable time and costs involved in the event that, for some reason, an Order cannot be implemented in the Scheme.

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