When I first qualified as a solicitor in 2001 pension sharing was new, having come into effect from 1 December 2000. Pension attachment was possible a few years earlier, but pension sharing changed everything. Many people don’t even know about it.

What is a pension sharing order?

In short, this is an order of the court within divorce proceedings, ideally by consent, whereby one party to the marriage or civil partnership is granted a percentage share of the other’s pension fund.  This percentage becomes theirs – either to have their own pension with the company if the scheme rules allow and they choose that, or more often to take out that money and invest it in another pension fund.  Either way, it no longer belongs to the former owner, and becomes a new fund in the name of the pension sharing beneficiary.

It’s a harsh reality that often the person with the lesser pension fund will be the person who earned less during the relationship.  It is important to remember that pension is an asset to be considered, the same as the other assets.

Nowadays with workplace pensions being mandatory more people have pensions.  It is not uncommon at all for the pensions to be worth six figures plus, and/or to be worth more than property.  They should not be overlooked.

Despite this, a recent survey by Which shows that 71% of people they surveyed had not included pension sharing in their divorce settlement.

But we’ve said we won’t look at each other’s pensions:

This is something I hear very often.  It is entirely understandable that in the midst of a relationship breakdown, clients are mainly focused on their immediate needs – ie. Where will I live?  How will I pay my bills?  These are really important issues.  However, it is not uncommon to find that the value of pensions in a marriage are far greater than the other assets including the house.  Sometimes the delight and relief at finding that your agreement with your ex will take care of your immediate needs, will eclipse any thoughts of how you will pay your bills after retirement or what you will live on.

OK, I hear you, what do I need to do?

The only way to get a pension sharing order is by court order within the divorce/dissolution proceedings.  That is not to say you have to go to court, as many cases settle by consent, but a pension sharing order will be part of a financial remedies (consent) order.  Pension sharing cannot be done any other way – a pension company will not share a pension without an order.

Should every case involve pension sharing?

No.  But far more cases should involve pension sharing than do.   Sometimes the pensions are not significant, or are used to “offset” another part of the settlement.  However, in every case before saying you are not including pensions in the settlement, you should know the value of what you might be foregoing.

Pensions are all too often being overlooked, especially where parties deal with matters informally without advice; with divorce now readily available on-line more people are dealing with their own divorces (this is fine) but not getting advice about financial settlement including pensions.  This is an important step, and may help you avoid unnecessary financial hardship in retirement.