Pension Sharing

Pension Sharing results in part of the pension assets held by one partner being transferred to their spouse. As the transferred pension assets are then held in the spouse’s own name this provides a “clean break” solution.

A pension share is normally expressed as a percentage of the CETV, the factors which should be taken into account in considering pension sharing are:

• Expected income to each party on applying a specified % pension share
• Expected cash lump sum which each party could expect on applying a % pension share
• Age at which benefits can be drawn by both parties
• The value of pension benefits to each party pre and post pension share
• Where more than one pension arrangement exists, which pension should be shared?
• Costs associated with pension sharing and who meets these costs
• Risks and uncertainties and how to manage these

In some cases (mainly public sector schemes), benefits for the spouse are set up within the scheme and must remain there. A significant proportion of private sector schemes insist that the spouse transfers the value of the benefits from a pension share to another arrangement whilst some schemes provide the spouse with both options. The amount of benefits, how certain it is that these benefits would be provided, and the level of flexibility will depend heavily on the approach adopted by the pension scheme.