Many people assume that receiving their Final Order, formerly known as Decree Absolute, means their pension will be split automatically. In reality, finalising the divorce is only the start of a separate pension sharing process.
The pension scheme cannot divide the benefits straight away. The Pension Sharing Order must first reach its legal effective date, and the scheme needs the correct court documents, completed forms and any required fees before work can begin.
If your divorce is already final but the pension share has not happened yet, it can be difficult to know whether the process is simply taking time or whether something has been missed. The Divorce IFA can help you understand where things stand, what may still be outstanding and what the pension share could mean for your retirement.
Call us on 0800 092 1229 or complete the form below if you would like help working through the next steps.
What Happens to a Pension Sharing Order After Decree Absolute?
Once your divorce is final, the next job is making sure the pension scheme has everything it needs to carry out the order.
That usually means sending the sealed Pension Sharing Order, the Pension Sharing Annex (Form P1) and the Final Order to the scheme. You may also need to complete scheme-specific forms and pay an implementation fee.
The order itself also needs to have reached its legal effective date before the pension scheme can act.
Once everything is in place, the scheme can apply the pension share. The person whose pension is being divided receives a pension debit, which reduces their pension rights. Their former spouse receives a pension credit in their own name.
Until that has happened, the pension share is not complete.
When Can the Pension Scheme Start?
The pension scheme cannot act as soon as the court makes the Pension Sharing Order.
In England and Wales, the order takes effect on the later of:
- The date the Final Order is granted
- 28 days after the Pension Sharing Order was made
The 28 days allows for the usual 21-day appeal period plus a further seven days.
If an appeal is made, the effective date can be later.
This is why someone can have their Final Order and still see no change to the pension. The scheme may simply be waiting for the Pension Sharing Order to become effective.
Does the Pension Get Shared Automatically?
No. The pension scheme deals with the Pension Sharing Order separately from the divorce itself.
Before it can start work, it needs the correct paperwork and information. This will usually include:
- The sealed Pension Sharing Order
- The Pension Sharing Annex (Form P1)
- The Final Order
- Any forms or information requested by the scheme
- Payment of any implementation charges
If you already have your Final Order but have heard nothing about the pension share, contact the scheme and ask what it has received.
Do not assume that someone else has sent everything across. A missing document or unpaid fee can be enough to hold the process up.
How Long Does a Pension Sharing Order Take?
Once the Pension Sharing Order has taken effect and the pension scheme has everything it needs, it has a statutory implementation period of four months.
That four-month period starts on the later of:
- The date the Pension Sharing Order takes effect
- The date the scheme receives all the documents, information and payment it needs
The scheme may finish the work sooner.
If your divorce was finalised several months ago and the pension still has not been shared, ask the scheme when its four-month implementation period started. That will tell you whether the process is running within the expected timescale or whether something is still outstanding.
If the answer is unclear, we can help you work through what the scheme is waiting for and what needs to happen next.
What Happens During Pension Sharing Implementation?
In England and Wales, a Pension Sharing Order must specify the percentage of the pension rights to be shared, rather than a fixed cash amount.
For example, the court may award one person 40% of their former spouse’s pension.
When the order is implemented, the pension scheme works out the value that percentage applies to. The original pension member receives a pension debit and their former spouse receives a pension credit.
What happens to that pension credit depends on the type of pension you are dealing with.
Private Pension Schemes
Private pension schemes do not all follow the same rules.
With some schemes, the pension credit can stay within the existing arrangement. With others, it may be transferred to another suitable pension.
The scheme can tell you what options are available before you make any decisions.
Unfunded Public Sector Pension Schemes
Unfunded public sector schemes such as the NHS Pension Scheme, Teachers’ Pension Scheme, Civil Service, Armed Forces, Police and Fire pension schemes work differently.
The pension credit stays within the scheme and the former spouse receives pension benefits in their own name.
Someone receiving an NHS Pension Sharing Order, for example, becomes a pension credit member of the NHS Pension Scheme.
These benefits cannot simply be moved into a personal pension in the same way as some private pensions.
What About the Local Government Pension Scheme?
The Local Government Pension Scheme is a public service pension, but it is funded.
Because of that, the rules are different from unfunded schemes such as the NHS Pension Scheme.
An LGPS pension credit may be transferable to another pension arrangement, depending on the scheme rules and any restrictions that apply.
If you are unsure what type of pension you have received or what you can do with it, we can help explain the options in plain English.
Will the Pension Share Match the Figure Discussed During Divorce?
Not always.
A Pension Sharing Order usually gives a percentage rather than guaranteeing a fixed cash amount.
The pension may have been valued earlier in the divorce, but the value used when the order is implemented can be different.
For example, a 40% pension share may represent one amount when the settlement is discussed and a different amount when the pension scheme carries out the order.
The percentage in the court order stays the same.
If the figures you receive after implementation are different from what you expected, we can help you understand why and what the pension credit could provide in retirement.
The Pension Sharing Order calculation also explains how the percentage is applied and why the final value may differ from earlier figures.
What Can Hold Up a Pension Sharing Order?
A pension share can be delayed for something as simple as a missing form or unpaid fee.
Common problems include:
- The sealed Pension Sharing Order not reaching the scheme
- The Pension Sharing Annex (Form P1) being missing or incomplete
- The Final Order not being supplied
- Scheme forms not being completed
- Information from either party still being outstanding
- Implementation charges not being paid
- The pension scheme raising a query about the wording of the order or annex
Some schemes charge significant implementation fees, so it is worth checking who is responsible for paying them and whether payment has been made.
If the pension share seems to have stalled, ask the scheme what it is still waiting for and whether its four-month implementation period has started.
If you are being passed between the scheme, your solicitor and the court and still cannot get a clear answer, The Divorce IFA can help you make sense of where the process has reached.
Can Pension Sharing Be Dealt With After the Final Order?
If your divorce is already final and pension sharing was never dealt with, do not assume that nothing can be done.
The legal position can depend on what applications have already been made and whether you have remarried. Remarriage can affect some financial claims against a former spouse, while Pension Sharing Orders are dealt with separately under Section 24B of the Matrimonial Causes Act 1973.
This is one to discuss with a family solicitor before taking further action.
Once you know what legal options are available, we can help with the financial side. That can include looking at what a proposed pension share could provide in retirement, how it compares with your other assets and whether it fits with the rest of your financial plans.
What Happens Once the Pension Share Is Complete?
Once the pension scheme has carried out the order, the receiving former spouse has pension rights in their own name.
For many people, that is when a different set of questions begins.
You may want to know how much retirement income the pension could provide, when you can take the benefits, whether the pension can be transferred or how it fits with your other savings and investments.
Those are financial planning questions rather than court questions.
The Divorce IFA can help you understand the pension you have received, what it could mean for your retirement and how it fits with the rest of your finances after divorce.
Has Your Pension Share Stalled?
If your Final Order has been granted but your pension share is still outstanding, start by finding out what the pension scheme is waiting for.
If you are not sure what the answer means, or you are unsure who needs to deal with the next step, we can help.
At The Divorce IFA, we have advised on hundreds of Pension Sharing Orders. We can help you understand where the process has reached, what may still be outstanding and what your pension credit or pension debit means for your future.
Where appropriate, we can also liaise with the pension scheme and work alongside your solicitor.
Call us on 0800 092 1229 or complete the form below to discuss your position.