Posted on: 17th October 2019
It’s a sad thing to talk about, but sometimes divorce is inevitable. Sharing your assets a part of the process that must be considered and this includes your. If you are discussing a pension sharing order a decree absolute, you may be wondering how a pension sharing order works…
What is a pension sharing order?
sharing orders after a decree absolute are a legal way for couples to share a pension once divorced. This will make it easy for each person to have a clean financial break and must be granted by a court.
How does a pension sharing order work?
Pension Sharing orders are part of the Welfare Reform andAct 1999 and are a pension value that is given by the courts by a cash equivalent. The value of your pension is then added to your other material assets to be split as part of the divorce settlement. Once the pension has been transferred, it is the individual’s responsibility to manage it and pay any associated fees.
How arevalued for divorce?
- The courts will consider the value of:
- Workplace pensions (past and present)
- Additional State Pension but not the basic State Pension
- Personal Pensions
As mentioned, pensions are valued on their cash equivalent value. If you have a defined contribution pension, whether it be workplace or personal, that is the total amount you have in your pension pot. If you have a defined benefit pension, aka the final salary pension, you must ask for a cash equivalent transfer value from your pension scheme trustees.
Only the pension holder can request a pension valuation.
What are the rules on pension sharing orders?
There are numerous rules on pension sharing orders after a decree absolute, many of which can be tricky to understand. Here are some common questions people ask about the rules…
What do I do with a pension sharing order?
With a pension standing order, the money from your ex’s pension must be transferred into a pension in your name. It cannot be paid into a bank account or savings. You may be able to join your ex’s pension scheme and keep your share if they have a police or NHS, army or fire service pension. However, you will typically need to arrange your own pension for the money to be transferred into.
How long does a pension sharing order take?
If you agree to a financial split with your ex, you must have a court sign it off or have your solicitors draw up a legally binding financial agreement. This could take some time depending on how long it takes you both to file the necessary paperwork the court and pension company.
Setting up a pension for the shared pension to go into can also be time-consuming. It’s always wise to bring this up as early as possible to ensure they get their new pension in place ready and reduce any delays at the end of divorce proceedings.
Transferring a pension with a pension sharing order
If you already have a pension sharing order and are wondering what’s next, you can relax knowing that it should be relatively simple to transfer your awarded share into a new or existing pension.
Pension sharing orders and existing pensions
If you already have your own pension, transferring your share of your ex’s pension should be doable. Before that, however, it helps to speak with an IFA to see if it’s the best choice for you. Some older pensions have high charges, but some newer pensions cost much less and offer more flexibility for.
If you’re happy with your pension choice, you can either hire an IFA to ensure things are done properly or do it yourself. Of course, we would strongly advise you do the former as they will do all the paperwork and chasing on your behalf.
Can a pension sharing order be reversed?
Yes, but only with a variation order from the courts. Please note that there is a strict deadline on this, so speak with your solicitor to see where you stand.
How do I get a pension sharing order?
If you’re in the early stages of divorce and are trying to determine what you may be entitled to from your partner’s pension, you should speak to your solicitor. Different circumstances mean different eligibility, so understanding the law surrounding it can be difficult.
Gather as much information as you can regarding both pensions from each party. You do not have the right to know your partner’s pension total unless you go to court and even then, you may not find out. It is possible to agree on a financial settlement with your spouse through a mediator. The solicitors can draw up a financial agreement or have the courts sign off whatever you agree to make it legally binding. If you cannot come to an agreement, you must see a solicitor and take matters to court.
Understanding all pension matters with
There are numerous elements to, including matters of divorce. What helps offer peace of mind, however, if speaking with an independent financial adviser. At Haven IFA, we are here to ensure you make the best decisions for your pensions. Get in touch to find out more.