Pension Sharing Order on Divorce – How Does It Work?

Table Of Contents

    What is a pension sharing order?

    A pension sharing order is a legal directive from the court that allows a couple to split pension funds between parties involved in the divorce. This means that a portion of one party’s pension benefits can be transferred to the other party, either as a lump sum or ongoing payments, depending on the court’s decision.

    The pension sharing process involves creating a pension sharing agreement that outlines the specifics of the order, such as the amount to be shared and the payment method. This agreement is then submitted to the pension provider, who will facilitate the transfer of the agreed-upon portion of the pension.

    A pension sharing order usually takes legal effect from the date of the Final Order (previously Decree Absolute) or 28 days from the pension sharing order being approved by the court.

    How does pension sharing work? A Typical Example…

    In our pretend scenario, let’s assume the Husband has a pension valued at £300,000, and the court decides on a pension-sharing order.

    Here’s a typical breakdown of how it works:

    Husband’s Pension Value: £300,000

    Court-Ordered Split:

    The court may decide to split the pension equally between Husband and Wife (50/50), or they may make a different allocation based on various factors such as each party’s financial needs, the length of the marriage, and other relevant circumstances.

    In this example, assume an equal split for simplicity. The final transfer amount will be worked out will be worked out the day before the order comes into legal effect.

    Husband’s Share:

    The husband retains 50% of the pension, which is £300,000 x 50% = £150,000.

    Wife’s Share:

    The wife receives 50% of the pension, which is also £300,000 x 50% = £150,000.

    Keep in mind that the actual division may vary depending on the specific circumstances of the couple as no financial settlement is the same.

    One partner may wish to keep hold of their pension and in exchange for that, they could offset this against other assets, for example, the family home, savings, or maintenance.

    When looking to understand what might be a fair amount, it’s worth looking at our blog post that highlights some typical divorce settlements.

    Below are the necessary steps involved in implementing a pension sharing order:

    Step 1 – Obtain the final order of divorce or dissolution:

    The pension sharing order cannot be implemented until after the final order of divorce or dissolution has been obtained.

    If the order has been made, but the final order is still pending, it’s crucial to obtain it promptly.

    This is because, in the event of the death of one of the parties after the pension sharing order has been made, but before it has become effective, the estate may miss out.

    Therefore, specific advice should be sought on this matter.

    Once the final order is received, a sealed copy must be sent to the pension provider.

    Step 2 – Send documents to the pension provider:

    Normally, the final court order will direct one of the parties, or the court itself, to send the necessary documents to the pension provider.

    However, it’s advisable to send them twice, just to be sure.

    The provider will typically require copies of the final court order, including the Pension Sharing Order, and a copy of the final order of divorce or dissolution.

    Step 3 – Respond to requests from the pension provider for further information:

    Upon receiving the Pension Sharing Order, the pension provider will either issue a ‘notice of implementation’ if they have all the required documents and information, or they will request further information.

    For example, they may need details about which pension scheme the benefits of the Pension Sharing Order should be transferred to, particularly if they are being transferred out to a different scheme.

    Step 4 – Pay the pension sharing fees:

    Some pension schemes, particularly those in the public sector, can charge to implement a pension sharing order.

    The final court order should specify who will be responsible for paying these fees or in what proportion they will be shared.

    It’s important to note that the fees must be paid before the pension share is implemented.

    Once the pension provider has all the necessary information, they typically have four months to implement the pension sharing order.

    Things you need to know

    The aim of pension sharing, introduced in the Welfare Reform and Pensions Act 1999, is to enable the courts to split pension rights between a husband and wife or civil partners at the time of divorce.

    The primary objective of the Pensions Act was to give couples and the courts greater flexibility and choice, by allowing pension rights to be treated in a way that delivers the fairest settlement of assets.

    By separating the ex-partner’s pension entitlement from the member’s pension a clean break is also achieved.

    Regardless of your pension arrangements, in England and Wales, the only way to deal with pensions upon divorce is to have a court approve your agreement in a financial court order.

    The court will decide how much of the pension rights of the plan member will be allocated to the recipient and their fund rights will be reduced by that same amount, called a ‘Pension Debit’.

    The rights allocated to the recipient are called a ‘Pension Credit’.

    Once the pension fund provider has received the court order there is a time limit of four months from the date of your final order in which to implement the pension sharing order.

    However, the scheme provider can delay the implementation period until any charges are paid.

    Key Points

    • A pension sharing order is usually made when the assets and income of the parties are not sufficient to provide an adequate financial settlement for both parties.
    • The PSO instructs the pension providers of a fund to transfer a percentage of the transfer value (anything up to 100%) to the party who is to benefit from the order.
    • Any order to share pensions must offer a percentage of the pension, not a fixed amount as the value can fluctuate.
    • Not all pensions can be shared – View our table below to find out which pensions can and cannot be shared using this mechanism.
    • The fees to share pensions can be excessive – High-street solicitors will often charge £2500+ to help you implement this order. Read about our service for £599 fixed fee.

    Which pension schemes allow pension sharing? 

    Pension scheme Can be shared?
    Occupational pension schemes (including AVCs)
    Personal pension schemes
    Stakeholder pension schemes
    Section 32 policies (Buyout policy or Deferred annuity plan)
    Retirement annuity contracts
    Statutory pension schemes
    Free-standing AVCs
    Employer financed retirement benefit schemes – unapproved schemes
    Contracted-out benefits, State Second Pension (S2P), State Earnings Related Pension (SERPS) and the protected payment part of the new State Pension
    Pensions in payment from any of the above
    Schemes in which the only benefits are equivalent pension benefits
    Basic State Pension
    New State Pension
    Pensions the member is receiving as a spouse, civil partner or dependant
    Pensions already subject to an earmarking or sharing order

    What Alternative Options Are There?

    Pension Attachment Order

    A Pension Attachment Order (referred to as ‘Pension Earmarking’ in Scotland) is essentially a form of spousal maintenance where part or all of a person’s personal pension is redirected to their ex-spouse or civil partner upon retirement.

    Attachment of pension payments is made from the pension fund at source rather than from the fund holder in either regular payments, a lump sum or a combination of both.

    Pension Offsetting Order

    A Pension Offsetting Order in divorce provides a clean break between all parties as the value of one spouse’s pension is exchanged, or offset, against other assets of similar value.

    So in practice, instead of giving up a portion of their pension, a husband can instead waive the equivalent value of their share of the marital home.

    Whether it is right to share your pensions and how you decide to share them will depend on the individual circumstances of your case.

    Pensions are just one part of the overall ‘matrimonial pot’, alongside other assets, such as property, savings, business interests, investments, and valuables for example that need to be considered before agreeing to a financial settlement.

    When Is Pension Sharing a Good Idea?

    In England and Wales, pension sharing can only take place by court order and only upon divorce or dissolution – therefore it’s not an option for unmarried couples. Pension sharing is unaffected by the remarriage or death of an ex-spouse and could be a good option if:

    • One spouse has a high value of pensions compared to other assets
    • You are close to retirement age and unlikely to build your own pension pot
    • You wish to take benefits from the pension credit from 50+, rather than waiting until your ex retires
    • You want to nominate potential beneficiaries of death benefits if you die before taking retirement benefits

    Pension sharing offers a clean break and generally provides greater flexibility to the divorcing couple and the courts ensure there’s a fair settlement.

    However, this option might not be the best choice for those individuals who already have an adequate pension of their own.

    Furthermore, pension sharing is not always your best option if retaining the family home is a priority. Pension sharing could lead to you having to share other assets, including property, then the family home may have to be sold.

    Key Points To Know:

    • The court will expect the fund member to request a valuation of the pension benefits, known as a Cash Equivalent Transfer Value (CETV), at the date of petitioning for divorce. If a CETV has been provided within the previous 12 months this will be accepted.
    • The provider of the pension scheme must supply the CETV within 3 months.
    • The pension provider has 3 weeks from receipt of the order to appeal.
    • Pension scheme providers can pass on the costs of implementing pension sharing orders to the divorcing couple.
    • Pension providers can pass on the cost of administering a pension sharing order unless you agree otherwise.
    • The pension-sharing fees are paid by the pension fund member (the person sharing the pension).
    • Divorce lawyers are not regulated, qualified, or insured to give financial advice.

    I’ve been awarded a share of my ex-partner’s pension, what should I do?

    The first thing you should do is gather all the necessary information about the pension scheme. This includes finding out the name of the scheme, the pension provider, and the value of the pension.

    You should also obtain a copy of the PSO document, as it will outline the specific details of the share you have been awarded.

    Next, it is crucial to seek professional advice from a financial adviser or a pension specialist. They will be able to guide you through the process and help you understand the implications of the order.

    They can also assist you in evaluating the options available to you, such as whether to transfer your share into a separate pension scheme or keep it within the existing scheme.

    Tips to make the process more manageable: 

    It’s worth noting that the process of sharing pensions can be made more manageable by taking some proactive steps before the pension-sharing order is made.

    For instance, writing to the pension provider at an early stage to obtain the information required to implement the order. Or contacting the provider with a draft copy of the order to seek their comments.

    Additionally, considering who will pay the pension sharing fees, if any, and who will send the documentation to the pension provider is crucial.

    This should be specified in the financial order, setting out the financial settlement, to avoid any disagreements or confusion down the line.

    Dealing with your pensions as part of a divorce is not something most people should do themselves.

    It’s important to seek professional advice throughout the process to ensure that the pension sharing order is implemented correctly and that both parties receive their entitlements fairly.

    Speak to one of our friendly team by calling us for a free consultation or chat with us on Live Chat for quick and reliable answers.

    Common Questions on Pension Sharing

    Is pension sharing compulsory?

    Pension sharing is not compulsory, but it has become a standard practice since its introduction in December 2000.

    This is often referred to as pension sharing on divorce, the new procedure.

    Divorcing couples must decide how to include the value of their pensions in the financial settlement, and pension sharing is one of the three available options.

    When is the money transferred?

    A pension sharing order cannot take effect until the divorce or dissolution procedure is finalised and the decree absolute or final order is granted.

    Once this happens, the pension provider has four months to implement the pension credit transfer.

    Will the pension provider charge me?

    Yes, the pension provider may charge fees for implementing the pension sharing order.

    They should provide information about the associated charges within 21 days of receiving the order.

    Be aware that the fees for implementing a PSO can be significant and they are usually paid by the person who is sharing their pension funds.


    If you have negotiated a financial settlement with your ex-partner and require a legally binding court order drafted to finalise it, we have an affordable service that is ideal for you.

    Typically speaking, high-street solicitors charge between £1500 – £3000 + VAT to draft a pension sharing order.

    If you would prefer a service without the unnecessary bureaucracy that usually comes with local solicitors alongside an affordable fee, then view our service below for more information.

    Solicitor Drafted Pension Sharing Order

    This service is ideal for couples that are looking to separate their pension assets by the way of a consent order. Our solicitors will draft the order to your individual circumstances and support you through the implementation.

    Was this article helpful?

    Do you have any questions?

    Chat to one of our team today, we would love to answer your questions!

    Request A Callback Live Chat

    No thanks, I don’t have any questions. Return to page.