Pension Sharing Orders: What You Need to Know

How Does a Pension Sharing Order Work?

A pension sharing order works by transferring a percentage of the pension holder’s CETV into the other spouse’s pension fund. Here is the step-by-step process:

1. Obtain pension valuations — both parties request a Cash Equivalent Transfer Value (CETV) from each pension provider. This is the starting point for negotiations.
2. Agree a percentage — with the help of solicitors (and, for complex cases, a Pension on Divorce Expert or PODE), both parties agree what percentage of the pension(s) should be transferred.
3. Draft the financial order — a solicitor drafts a Financial Consent Order with an accompanying Pension Sharing Annex specifying the percentage and the scheme details.
4. Provider workability check — before submitting to court, it’s standard practice to send the draft annex to the pension provider first. Providers typically take up to 21 days to confirm the wording and figures are workable against their scheme rules. Skipping this step is one of the most common causes of rejection further down the line, so it’s worth building the 21 days into your timeline.
5. Submit to court — the order is submitted to the family court for approval. The court does not require a hearing for uncontested orders in most cases. Once sealed, send copies to the pension provider — it’s worth sending them twice as a precaution, since providers can and do lose paperwork.
6. Wait for the court seal — once the court approves (“seals”) the order, a 28-day waiting period begins.
7. Apply for the Final Divorce Order — you must not apply for your Final Divorce Order until this 28-day period has elapsed. The pension share takes effect on whichever is later: the Final Divorce Order date or 28 days after the pension sharing order.
8. Pension scheme implements the share — once the order takes effect, you send it to the pension provider along with a P1 form. The pension administrator creates the transferee’s new pension fund. The administrator revalues the pension at its current market value, applies the agreed percentage, deducts a pension debit from the pension holder, and creates a pension credit for the receiving party. The receiving party can usually choose between an internal transfer (a separate fund within the same scheme) or an external transfer into a different pension scheme. This typically takes up to 4 months, though timescales vary by scheme.
9. Confirmation — once complete, the scheme should issue a confirmation notice to both parties, typically within 21 days of the transfer being finalised. Keep this for your records — you may need it for tax or financial planning purposes later.

Important: If the Final Divorce Order is granted before the 28-day window closes and the pension holder dies during that window, the transferee risks losing their pension entitlement and their widow/widower’s benefit. Always observe this sequencing rule.

Critical Timing Rules for Pension Sharing Orders

The sequencing of a pension sharing order relative to the Final Divorce Order is one of the most commonly misunderstood aspects of the process. The rules are:

• The pension sharing order takes effect on the later of: (a) the date of the Final Divorce Order, or (b) 28 days after the court seals the pension sharing order
• You should not apply for the Final Divorce Order until at least 28 days have passed from the date the pension sharing order was sealed
• If you are the transferee, applying for the Final Divorce Order too early creates a risk window — if the pension holder dies before the share is implemented, you could lose your entitlement and any widow/widower’s benefit
• The court typically takes up to two weeks to process the Final Divorce Order application, so factor this in

How Much Does a Pension Sharing Order Cost?

There are two distinct costs associated with a pension sharing order:

1. Legal fees for drafting the order

High-street solicitors typically charge between £3,000 and £5,000 + VAT to draft a pension sharing order and accompanying Financial Consent Order.

A specialist online service, such as Divorce-Online charges a fixed fee of £599, which is significantly lower. You can view current pricing on our consent order service page.

2. Pension scheme implementation fee

The pension provider charges a fee to implement the order, which varies considerably by scheme. This fee is typically either split equally between the parties or deducted from the pension pot before division.

You should request the scheme’s implementation fee schedule before finalising any agreement so both parties can factor it in.

Note that the pension provider will not begin implementing the share until any fee due has been paid in full — factor this into your timeline, particularly if payment is coming from the pension holder.

Who pays the costs?

In the majority of cases, costs are shared equally. If one party refuses, a court can direct how they should be allocated. Always clarify this in the consent order itself to avoid disputes later.

What to Consider After Implementation

Once the pension share has been implemented and the new fund is in the recipient’s name, there are two things worth addressing straight away rather than leaving until retirement.

Tax Implications

The transfer itself is not a taxable event, but ongoing tax treatment differs for each party. The receiving party will be liable for income tax on pension payments in the normal way once they start drawing from the fund, exactly as they would with any other pension.

The transferring party should check with their scheme whether the reduction in their pension triggers any tax charge — this is unusual but worth ruling out, particularly for anyone close to the Lifetime Allowance or Annual Allowance limits.

Because the rules depend on scheme type and individual circumstances, it’s worth getting this confirmed by an independent financial adviser rather than assuming standard treatment applies.

Long-Term Financial Planning

A pension sharing order gives the receiving party an independent pension fund, but it doesn’t automatically give them a plan. It’s worth reviewing:

• How this fund fits into your wider retirement picture — alongside any workplace pension, State Pension entitlement, and other savings
• Whether the fund needs consolidating or leaving where it is — particularly relevant if you’ve received a share of a defined benefit scheme, where transferring out isn’t always advisable
• Future income needs, including healthcare costs in later life, especially if this fund will form your primary retirement income

If you’re relying on the shared pension as a significant part of your retirement income, it’s worth speaking to a financial adviser as soon as the share completes, rather than waiting until you’re closer to retirement age.

Can I Take a Lump Sum from a Pension Sharing Order?

No. A pension sharing order does not allow either party to withdraw a lump sum at the time of the transfer.

The transferred percentage becomes a separate pension fund in the recipient’s name, subject to the normal pension access rules — including the minimum pension access age, currently 55 (rising to 57 in 2028). The recipient cannot access the funds until they reach that age.

Can You Get a Pension Sharing Order After the Final Divorce Order?

Yes — it is possible to obtain a pension sharing order after the Final Divorce Order (formerly called the Decree Absolute) has been granted. However, you must apply to the court to reopen financial matters, and the court has discretion about whether to allow this.

There is no hard time limit in England and Wales, but significant delay can count against you.

Important: If you remarry before obtaining a pension sharing order, your right to claim against your former spouse’s pension is extinguished. Remarriage bars pension claims, so this should be addressed before any future marriage.

Pension Sharing Order vs Pension Offsetting vs Pension Attachment: What Is the Difference?

There are three main ways to deal with pensions in divorce, and each has its pros and cons. See the table below to see the difference in how each work:

Which Pension Schemes Can Be Subject to a Pension Sharing Order?

Under the Welfare Reform and Pensions Act 1999, most types of pension scheme can be subject to a pension sharing order in England and Wales, including:

• Occupational pension schemes (including AVCs)
• Personal pension schemes
• Stakeholder pension schemes
• Section 32 policies (deferred annuity / buyout policies)
• Retirement annuity contracts
• Statutory pension schemes (e.g. NHS Pension, Teachers’ Pension, Civil Service Pension)
• Free-standing AVCs

The following cannot be subject to a pension sharing order:

• The basic State Pension
• The new State Pension (including protected payments)
• Pensions already subject to an existing earmarking or sharing order
• Pensions the member receives as a spouse, civil partner, or dependant

Note on defined benefit (final salary) pensions: these are often the most valuable and the most complex to divide. The CETV may understate the true value. In high-value cases, instructing a Pension on Divorce Expert (PODE) is strongly recommended.