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Divorce: Pension Sharing Order or Pension Attachment Order?

A pension is usually the second largest asset after the matrimonial home. It may be that only one party to the marriage has a pension or rather a substantially larger pension than the other and it has been agreed to be shared.

There are many ways to deal with a pension in divorce however it is up to you to decide, with advice from your legal representative of course, which is best for you. This can all depend on whether you are the ‘member’ giving part of your pension away or the ‘non-member’ receiving part of your ex-partner’s pension.

The two main ways are either a pension sharing order or a pension attachment order.

 Pension Sharing Order

A Pension Sharing Order is the more straightforward of the two as it will achieve a clean break between the parties.

The parties will agree a lump sum (expressed as a percentage) of the transfer value of the member’s pension to be given to the non-member. The non-member will be awarded a ‘pension credit’ which is transferred into a separate pension in their name. It will be a separate fund bespoke to the non-member’s needs and life expectancy.

However, the non-member will not benefit from any contributions made by the member post-divorce.

Pension Attachment Order

Contrastingly, a Pension attachment Order does not achieve a clean break between the parties.

It will be agreed between the parties the amount of the pension the non-member will be entitled to. The pension provider will be notified by providing the Court Order and in turn they will be obliged to pay a percentage of the member’s pension to the non-member once it comes into payment.

However, the Pension Attachment Order will lapse on death of member and cease on the re-marriage of non-member. Therefore there is limited security for the non-member in these circumstances.

An additional setback is that the pension will only become payable once the member reaches the age of retirement or decides to draw their pension. There will be issues if there is a large age gap between the parties.

If you wish to discuss this further, please contact Lynn Gooch on 020 8502 3991 for more information.

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