Pension sharing orders are a means by which pensions can be divided up between a couple either when they divorce or on the dissolution of a civil partnership.
They are just one part of the whole process of such a separation and come at what can be an incredibly stressful time for everyone involved. So with this in mind and before looking further at these orders it should be emphasised that although courts have the ultimate sanction it is best to seek agreement wherever that may be possible.
By way of background, the orders themselves were first introduced by the Welfare Reform and Pensions Act 1999 and they were later extended to include dissolutions of civil partnerships. They can also be made when a marriage is annulled but importantly they are not available as a remedy to couples where there has been no marriage, annulment or civil partnership.
The process can be quite involved and technical but in substance what it boils down to is determining a valuation for each of the various pension arrangements which each party may have and then dividing them up according to what is either agreed or ordered by the court.
The types of pensions to which these orders may apply include personal pensions, workplace pensions and any additional state pensions to which people might be entitled. They may also apply to pensions which are already being accessed and to annuities which have already been purchased.
Each type of pension will have its own rules and particular characteristics and it is important to make sure that each is dealt with in the correct way. For example, it might be relatively uncomplicated to obtain a cash equivalent transfer value for a personal pension. But in order to get such a valuation for a final salary pension the process might be more involved since it would mean looking at the present value of something which might not come to fruition for many years to come.
Once the value has been determined, a division between the parties needs to be made on the basis of a particular percentage for each pension which may either be agreed or ordered. Whilst there are guidelines as to the approach in this respect, each case will inevitably depend upon its own particular facts.
As with pensions as a whole, pension sharing orders can give rise to all sorts of small technical points that need to be taken into account. So, not only do the particular details of the pension valuation need to be addressed but it is also worth being alive to the charges that pension providers may make for helping to facilitate the division of different types of pension. What’s more, the wider picture of pensions for each party need to be borne in mind since, for example, a pension sharing order may potentially affect both the annual and lifetime pension allowances of each party.
Despite the complexity that can sometimes arise in this area, overall pension sharing orders exist to help facilitate the division of assets at this difficult time. What’s more, however complicated and overwhelming things may sometimes look there are always experienced professionals available who can see the wood from the trees and help to bring about a resolution.
Campions Solicitors have substantial experience of these issues.If you would like further advice or wish to discuss in general please contact our Director Daniel Priest on DPriest@campions.co.uk.
Contact us on Landline: 0115 9247 023 or Freephone: 0800 1071 208.