The Complete Guide to Pension Sharing Orders in Divorce

Why Pensions Matter in Divorce

When going through a divorce, most couples focus on immediate assets like the family home or savings, often overlooking pensions. However, pensions are typically the second most valuable asset after property, and failing to include them in your financial settlement can leave one partner significantly disadvantaged.

A recent Yahoo News feature highlighted that many people, particularly lower-earning spouses, miss out on as much as £80,000 because pensions are not considered during divorce settlements. Similarly, The Mirror reported that pensions are often ignored due to the emotional stress of divorce, leading to financial insecurity in later life. In both articles, I was asked to provide expert insight on the importance of pension sharing and why failing to secure a fair financial settlement can have long-term consequences.

To ensure a fair settlement and secure your future, it’s crucial to understand how Pension Sharing Orders work and why they are essential.

What is a Pension Sharing Order?

A Pension Sharing Order (PSO) is a legally binding agreement that ensures pension assets are divided fairly between spouses upon divorce. Introduced in 2000, this provision allows for a clean break by transferring a percentage of one spouse’s pension into the other’s name.

How Does A Pension Sharing Order Work?

1. The court issues a Pension Sharing Order, specifying what percentage of the pension should be transferred.
2. The recipient receives a pension credit, which they can either keep within the original scheme (if allowed) or transfer to another pension provider.
3. The original pension holder gets a pension debit, reducing the value of their pension accordingly.

For example, if a pension is worth £100,000 and the court orders a 50% split, each spouse will receive £50,000 in pension benefits.

Pros and Cons of Pension Sharing Orders

Pros:

• Provides a clean break, preventing future financial claims.
• Ensures both parties have pension provision in retirement.
• The arrangement remains valid even after remarriage or other life changes.

Cons:

• One person’s retirement benefits may be reduced.
• Some pensions, like Small Self-Administered Schemes (SSAS), can be difficult to split.
• There may be provider fees for processing the split.

How to Apply for a Pension Sharing Order

To obtain a PSO, you must apply for a Consent Order, a legal document that outlines how assets, including pensions, will be divided. The order must be approved by the court and can only be granted after the final order (previously decree absolute) in your divorce.

Steps to Obtain a PSO:

1. Obtain a Cash Equivalent Transfer Value (CETV): Contact your pension provider to request a valuation.
2. Agree on the Pension Split: Negotiate with your spouse, either independently or through mediation.
3. Apply for a Consent Order: Submit your agreement to the court for approval.
4. Implement the Order: Once approved, your pension provider has up to four months to transfer the funds.

Important: Some public sector pensions, like NHS and Teachers’ pensions, have faced delays in issuing CETVs, creating unnecessary stress for divorcing couples. In my work at Easy Online Divorce, I have assisted many individuals affected by these delays, ensuring they take the right steps to avoid setbacks. If you’re affected, contact your provider as early as possible.

Pension Sharing vs. Other Divorce Pension Options

There are three main ways to divide pensions in divorce:

1. Pension Sharing: Pension assets are split immediately, creating a clean break.
2. Pension Offsetting: One spouse keeps the pension while the other receives an equivalent value in other assets (e.g., a larger share of the home).
3. Pension Earmarking: A portion of one spouse’s pension is set aside for the other upon retirement, but this does not provide a clean break.

Pension sharing is often the best choice for those seeking financial independence and long-term security.

Common Questions About Pension Sharing Orders

Can I get a Pension Sharing Order without going to court?

No, a PSO must be approved by the court through a Consent Order.

How long does it take to implement a Pension Sharing Order?

Once the court issues the order, pension providers typically have four months to process the transfer.

Can a Pension Sharing Order be changed after divorce?

No, once a PSO is granted, it cannot be altered, even if circumstances change.

Do all pensions qualify for pension sharing?

Most private and workplace pensions are eligible, but state pensions cannot be shared.

Why Choose Easy Online Divorce for Your Pension Sharing Order?

At Easy Online Divorce, we specialise in helping couples secure their financial futures with legally binding Pension Sharing Orders. Our fixed-fee services make the process simple, affordable, and stress-free.

✅ Pension Sharing Order – £599 → Learn more
✅ Fast-Track Pension Sharing Order (1 Week) – £798 → Get started

Still not sure? Talk to one of our friendly experts and book a Free Consultation here.

As highlighted in our recent features in Yahoo News and The Mirror, ensuring pensions are fairly divided can prevent costly mistakes and financial hardship in later life. Don’t leave your future to chance—secure your pension rights today!