Pension Sharing Orders 101: The Basics

Going through a divorce can be stressful for a multitude of reasons. One common reason for stress during divorce is the finances, and more specifically, the division of the assets. Who should get what? Do we need to sell the home? Will I lose my pension? What about the car? Below we address the rules around one of the most common approaches to dealing with pensions upon divorce – the Pension Sharing Orders. We will address the purpose of Pension Sharing Orders, how to get one and how they are implemented.

What is a Pension Sharing Order?

Pensions are often one of the most valuable assets to consider upon divorce. Pensions, whether accumulated pre-marriage or during the marriage, are usually included within the “matrimonial pot” and therefore should be taken into consideration when dividing the matrimonial assets. Pension Sharing Orders (PSO) are one of the most common ways to dealing with the division of the pensions.

PSO’s are often made as part of a financial settlement upon divorce, and sets out how much of one party’s pension will be given to the other party.  This is done by way of percentages. Upon implementation of a PSO, a percentage of one party’s pension fund will be transferred to the other party’s pension. This is done with the intention of enabling both parties to achieve a clean break in the divorce, which is achieved by determining any pension divisions at the time of divorce. This means that once the PSO has been implemented, each party can build their pension funds back up independently of the other party.

How do I get a PSO?

A Court Order will be needed in order to implement a PSO. A Court application can be made detailing your intended pension division in consensual circumstances, or alternatively, Court may order a PSO where the circumstances are contested. PSO’s must be approved by Court.

How are PSO’s implemented?

Once the Court has issued the PSO, the relevant pension provider must be sent the following documents:

• A copy of the sealed financial Order;
• A copy of the PSO annex;
• A copy of the Final Order (formerly known as the decree absolute);
• Payment for any pension sharing fees;
• Any further documents required by the pension providers.

Once the pension providers are in receipt of the above, they will have four months to implement the transfer. As explained above, the intention of the PSO is to achieve a clean break, meaning that neither party should make claims toward the other’s pension after the PSO has been implemented.

For more information on pension sharing or financial settlements upon divorce or dissolution, please contact a member of our Family Team.