FiveWays Wealth

Shaping Your Future


Frequently Asked Questions

The jargon used in relation to pensions is often hard to understand. In this section we’ve unpacked many of the key terms you will come across in reports and discussions.

What is pension sharing?

Pension sharing is where on divorce the pension assets are split to provide pension rights to each party in their own right.

Once the parties are divorced and the pensions split then the rights belong to each party respectively and a ‘clean break’ is achieved.

Once a pension sharing order becomes effective it cannot be altered or reversed.

Pension sharing applies to divorce proceedings that commenced on or after 1 December 2000, with this being the date on which the petition is lodged with the Court. There is no provision for retrospective settlements.

Pension sharing is not available for legal separation purposes nor cohabitants.

This is no prescribed way in which the pensions must be split, and it is important to remember that the pensions are just another asset of the marriage – but can often be either the largest or second largest asset of the marriage.

The pensions may be split to provide equality of ‘capital value’ or ‘income’, or they may be split to meet a specific financial need.

It may be argued that benefits accrued before the time of cohabitation / marriage or after the date of separation are to be excluded, but this will depend on the circumstances of each case.

There may be an adjustment to allow for the value of other matrimonial assets retained.

There is no right or wrong way – and if the parties cannot agree then the Court will decide.

Do I need a pensions report?

The question as to whether a pensions report is needed unfortunately is not an easy one to answer, and it is usually something that you will need to consider with your family lawyer.

There are many issues to consider: –

  • whether the court feels it is appropriate
  • whether the benefits outweigh the cost
  • whether it is justified in view of the value of the overall assets
  • the types of pensions involved, for example if there are defined benefits held by either party then a report is certainly usually required

The purpose of a report is to assist the parties, and the court, to consider how to fairly divide the pension assets.

As the parties are likely to have a mixture of different pension arrangements the report may need to consider many issues including: –

  • how to achieve equality of capital value at the specified retirement age(s)
  • how to achieve equality of income at the specified retirement age(s)
  • the cost of implementing a pension sharing order
  • an appropriate amount to offset the pension benefits either in full or in part
  • whether benefits accrued before marriage / cohabitation or after separation should be excluded
  • how to achieve a specific income to meet the parties needs
  • the effect of the Lifetime Allowance
  • identify the earliest that benefits are available
  • identify the tax-free cash sum available at retirement
  • if any of the pension arrangements contain preferential terms and conditions

Is it worth obtaining a ‘shadow expert’ report?

Most pensions reports are prepared on a ‘single joint expert’ basis, which means that they are impartial to the parties appointing the expert, and the expert’s duty is to the Court. Because a single joint expert must maintain a neutral stance, they cannot advise either party on specific issues that may affect them personally. They are guided in their assessment by questions submitted by the lawyers for both parties.

A ‘shadow expert’ can be engaged separately to assist one of the parties. This could be appropriate if one party’s pension arrangements have unusual features.


Mrs W’s solicitors asked us as shadow experts to look at the pensions information provided by her ex-husband. We identified he had a beneficial early retirement option available due to his being a member of an earlier pension scheme that was amalgamated into his current arrangements. We helped create a specific question to be put in the letter of instruction to the single joint expert which resulted in the pensions report indicating an additional £140,000 should be made available to Mrs W.

Are pensions dealt with in isolation?

Pension benefits are only one part of the overall assets of the marriage, and are generally not divided in isolation to the other assets.

Once all the financial information has been gathered and exchanged, and this may include a pensions report, a decision must be reached as to how all the assets are to be split to meet the parties’ needs and objectives.

The process you are using - mediation, the collaborative process or the Court process - to achieve an overall financial outcome on your divorce may dictate how you reach an outcome in respect of the pension benefit.

If it is not possible for you to come to a financial agreement by consent then it will be necessary to issue court proceedings, with ultimately a judge making an order.

Whichever method is used – mediation, collaborative or court – it is important to remember that only a court order can achieve the division of pension assets by the awarding of either a pension sharing order or a pension attachment order.

The consent/court order will need to contain the correct provisions for there to be a pension order and be accompanied by the appropriate pension sharing annex(es) or pension attachment annex(es).

If you are self-represented and/or mediating it may be necessary to appoint a family lawyer to assist with the preparation of the necessary documentation.

How long does it take to implement a pension sharing order?

Once the scheme trustees / managers have received the pension sharing order and all the associated documentation the order must normally be implemented within a 4-month period.
This is known as the implementation period.
The documentation that the scheme trustees / managers require is
• The final order
• The consent / court order
• The pension sharing annex (P1)
• Receipt of the required information set out in regulations

Who is responsible for the issue of the pension sharing order?

A pension sharing order must be issued by the court either by way of a court order for a contested case or by a consent order if by agreement.

The order is issued to the trustees/managers by the Court, in England and Wales, but there is evidence that this is not occurring in all cases and so it is good practice for copies to be sent to the scheme directly to ensure that they are aware of its existence and to ensure that the implementation period commences as soon as possible.

The order will be accompanied by an annex to the order that will detail the pension share as a percentage of the member’s cash equivalent transfer value, which may be up to 100%.

There must be a separate annex for each pension arrangement.

What pension arrangements can be subject to a pension sharing order?

The pension arrangements that can be shared include: -
• Final Salary schemes including AVC’s
• Occupational Money Purchase schemes including AVCs and Section 32 Buyouts
• Personal pension arrangements
• Stakeholder pension arrangements
• Retirement annuities
• Income Withdrawal
• Annuities
• State Earnings Related Pension Scheme (SERPS)
• Second State Pension (S2P)
This includes arrangements where benefits are already in payment.
In England, Wales and Northern Ireland all accrued pension rights up to the time of divorce may be shared. 
Benefits that cannot be shared include:- 
• Basic State Pension
• State Graduated Pension
• Equivalent Pension Benefits where they represent the member’s only rights in the scheme
• Spouses and dependants pensions in payment from a previous marriage
• Death in service lump sum
• Benefits that are already subject to an earmarking order
• The three Great Offices of State i.e. the Prime Minister, the Lord Chancellor and the Speaker

Can a pension sharing order apply to a pension in payment or income withdrawal?

A pension sharing order can be applied to pensions that are already in payment, whether by annuity or income drawdown.

If the pension is being paid by way of an annuity, the contract will be unwound and new separate annuities will be created. Alternatively, the ex-spouse receiving the pension credit i.e. transfer value, may choose to remain invested within a suitable pension arrangement and defer annuity purchase.

The regulations provide no clear guidelines on the correct method for valuing a pension in payment. Different product providers/actuaries follow different methods. Therefore, this may to be area where the opinion of a consulting actuary may be felt beneficial.

Medical evidence may be required to prevent selection against the annuity provider.

Sharing an income drawdown plan will be achieved by dividing the drawdown fund between the parties.

Advice issues will include whether or not drawdown remains viable with the new lower drawdown fund for the scheme member.

The former spouse will need to take advice to establish the best method of enjoying income given their own circumstances, fund size, attitude to risk etc. It may be that they should use their share of the fund to purchase an annuity rather than continuing with draw down.

What benefits are paid in the event of death before a sharing order is implemented?

Where the former spouse dies before the Pension Sharing Order has been implemented, the person responsible for the pension arrangement shall, within 21 days of the date of receipt of the notification of death, notify in writing any person whom the person responsible for the pension arrangement considers should be notified of the matter, the following information.
• How the Trustees/Managers intends to discharge their liability in respect of the pension credit
• Whether the Trustees/Managers intend to recover charges from the person nominated to receive the pension credit benefits, and if so, a copy of the schedule of charges. 
• A list of further information that the Trustees/Managers require in order to discharge their liability in respect of the pension credit.

Can I vary a pension sharing order?

A Pension Sharing Order can be varied before a Conditional Order has been made Final, but an application must be made before the Conditional Order is made Final.  

An application to vary would stop the implementation of the order until the application has been heard and decided.

It is possible to apply for a Pension Sharing Order when maintenance is varied for petitions filed on or after 1st December 2000

What happens after the implementation period has commenced?

The scheme trustees /managers must issue a Notice of Implementation to both the member and former spouse within 21 days of receiving all the requirements to commence the implementation period. 
The Notice of Implementation should confirm 
• that all the information has been received 
• The start date of the implementation period
• The date by which the pension credit will be discharged
Penalties can be applied if the Notice is not issued.

What happens if we cannot come to an agreement?

If it is not possible for you to come to a financial agreement by consent then it will be necessary to issue court proceedings, with ultimately a judge making an order. It is strongly recommended that professional legal advice is taken to consider the impact of this including the potential cost and timescales.

What do I do with the pensions report?

If a pension report has been prepared this will probably give several options and parameters to consider.
In deciding how to divide the pensions it may be appropriate to seek guidance from a pension specialist / financial planner to:
  • help explain the pension report, if one was prepared, and answer any queries you may have, this may be either face-to-face or via telephone or video conference 
  • discuss the options for implementation, if necessary
  • create a cash flow model to consider the overall outcome of various scenarios to consider the financial impact. Planning can take into account savings, pensions, housing, investments, income (including maintenance) and the need for life assurance to protect yourself and your dependents

Contact 504 Park Way, Worle, Weston-super-Mare, North Somerset BS22 6WA