Divorce & Pension Rights
Pension splitting
The third option for sharing pension benefits was introduced with the Welfare Reform and Pensions Act 1999. The courts still have the option of making earmarking orders but they may also order a pension provider to "split" a pension so that both husband and wife have separate, independent pensions. The advantages here are that the wife no longer has to wait for her ex-partner to take pension benefits but may make her own arrangements and she will not lose this pension if her ex dies before reaching pensionable age. Sharing is done at a fixed date. Thereafter the wife will not benefit from any further pension contributions made by her ex - thus the husband is able to rebuild his own pension provision.
Earmarking or pension sharing are not discriminatory. If the wife has the bigger pension, an earmarking or pension sharing order could be made out in favour of the husband. There is also no requirement to split equally. It is done on the basis of percentages. The percentage to be transferred from one party to another will depend on individual circumstances.
Pension sharing is not compulsory. Pension provision is often the second largest capital asset of the marriage after the former matrimonial home so it is almost always looms large in a divorce settlement. However, you should be aware that there is no "automatic" entitlement to a spouse's pension. People may assume that because they have been married they are entitled to half of everything - including the pension. This is not the case.
It is up to the respective parties and their lawyers to agree on the most equitable way of dividing up all the matrimonial assets, not just the pension, and offsetting may still be appropriate in some cases, particularly where the pension fund is small.
Earmarking pension provision
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