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Key takeaways from this article
- A pension sharing order creates a clean break.
- All documents must be correctly dated and valid.
- How a sharing order is implemented depends on the scheme and its wording.
1.What is pension sharing?
Pension sharing is one way to deal with a pension on divorce. It involves:
- a pension debit applied to the member's pension, and
- a pension credit granted to the ex-spouse.
It is commonly referred to as a clean break solution, as once implemented there is no ongoing link between the parties in respect of the pension (unlike earmarking).
2. What documents are required?
Four documents are required before a pension sharing order can be implemented.
- Final divorce paperwork to show the divorce is complete.
- The financial agreement.
- A pension sharing annex.
- Instructions as to where to send the pension credit.
Let’s look at these in more detail as the names of documents vary depending on whether parties agree and also where the divorce happens (the legal jurisdiction).
This is the paperwork that shows the divorce is complete. It is normally called a ‘Final Order’ and was historically known as a ‘Decree Absolute’. In Scotland this can be called a ‘Extract Decree of Divorce’.
This sets out how assets, including pensions, are to be divided. The most common financial agreements you will see are:
England and Wales
- Financial Remedy Order by consent – this is where there is a mutual agreement and is commonly referred to as a consent order.
- Financial Remedy Order after contested proceeds – this is where the agreement is imposed by the court as the parties could not come to an agreement. This is commonly referred to as ‘financial remedy order’. Its historical name is Ancillary Relief Order.
Northern Ireland
- The documents are the same as England and Wales except that the contested order is still called an Ancillary Relief Order.
Scotland
- Minute of Agreement – this is where there is a mutual agreement however unlike in England, Northern Ireland, and Wales this does not have to be approved by the court. Instead, it is drawn up in the presence of solicitors and registered in the ‘Books of Council and Session’.
- Order for Financial Provision – this is where the agreement is imposed by the court as the parties could not come to an agreement.
A pension sharing annex is the separate document that is completed for each pension that is being shared. It will contain details of the scheme, the reference number of what is to be shared and what the share is.
For England, Northern Ireland, and Wales this will be a percentage of the cash equivalent transfer value. For Scotland this could either be a percentage or a monetary amount.
3. What makes documents valid?
For a pension sharing order to be implemented each document must be valid. This generally means the document must be dated and sealed.
Increasingly, divorce documentation is issued through the online court system, MyHMCTS. This can change how documents are dated and can cause confusion if documents are downloaded too early.
In MyHMCTS cases:
- the final order will be dated in the usual way
- the financial agreement itself may be undated. The effective date is taken from the accompanying approval notification. A notification email is sent to the solicitor/associated parties confirming the approval is now uploaded
- the pension sharing annex is a two-step process:
- it is initially uploaded at the same time as the consent order but is undated
- the court staff then review, date, and reupload the sharing annex, sending a further confirmation email.
Read the guidance for MyHMCTS.
4.What information is provided and when?
Before a financial agreement is done the pension scheme may be asked for information via a Form P. When that is received the pension scheme will provide:
- a current valuation
- an explanation of how the valuation is calculated
- the benefits included
- whether a pension credit member can remain in the scheme
- whether a transfer out is available
- any charges
- scheme name and address
- details of any:
- existing pension sharing orders
- non‑shareable benefits (e.g. existing pension credits).
As the pension scheme provider, Quilter will write to both parties.
To the member (pension debit):
- confirmation of receipt
- what information we require
- notice of implementation once we can implement.
To the ex‑spouse (pension credit):
- confirmation of receipt
- what information we require
- notice of implementation once we can implement.
The pension scheme will write to both parties.
To the member (having pension debit):
- date of transfer day
- value of pension on transfer day
- value of pension debit
- value of pension after debit deducted
- details of any ongoing regular withdrawals.
To the spouse (having pension credit):
- date of transfer day
- value of the pension credit
- if staying with pension scheme – product and charge information
- if transferring elsewhere – details of the receiving scheme.
5. Implementation requirements and deadlines
Before a pension sharing order can be implemented, the scheme will need:
- final divorce paperwork
- the financial agreement
- a pension sharing annex
- transfer instructions – where the spouse would like the pension credit to be sent.
Once all the above are provided, the pension scheme has four months to implement the order.
Some schemes will charge to implement the sharing order.
Jurisdictional differences:
Scotland:
The ex‑spouse has two months to provide the required information, otherwise the order will lapse. There is however the possibility of applying for an extension with the courts.
England, Wales, and Northern Ireland:
No equivalent deadline, which can lead to delays.
6. How is pension sharing implemented with Quilter?
The way a pension sharing order is implemented depends on the type of scheme.
The Quilter Collective Retirement Account (CRA) if a fully insured unit linked pension scheme. So, the way we implement a sharing order may differ from other types of pensions such as a defined benefit scheme or money purchase scheme, where the holdings are held directly by the member as opposed to an insurance contract.
A pension sharing order takes effect either the later of:
- the date the divorce is finalised or
- the end of the appeal period for the pension sharing order.
The effective date sets the point at which benefits are ring fenced to calculate each person’s share. Because the value of the CRA units change daily, the cash value of those units will be different from the valuation used by both parties to come to an agreement upon divorce in the first place.
Once Quilter has received the divorce paperwork, financial order, and sharing annex, we will then calculate the value at the end of the day before the effective date. As the Collective Retirement Account (CRA) is a unit based pension, the valuation will show how many units are in each fund on the morning of the effective date.
Quilter then calculates the pension debit by applying the percentage on the sharing annex to the number of units in each fund. We will then sell those units to generate a cash value. We will also sell an additional amount of cash to cover six month’s worth of fees so as not to erode the cash waiting to fund the pension debit.
Again because the value of the CRA units change daily, the cash value of those units produce upon sale will be different to the value on the day we ringfence the units. This does not mean our member or their ex-spouse is losing or gaining money, it just means the units that were ring fenced and now belong to the spouse (from the date the sharing order became effective) have either gone up or down in value.
We will hold the cash value of the pension debit within our member account for 30 days unless we have receive a transfer instruction telling us where to send the money. If we have not received a transfer instruction within 30 days, we will create a new account to segregate the money so as not to interfere with any financial planning for our member. We will set the account up under our member’s name but add the designation ‘PSO’ to the name so that it is clear this money represents the proceeds of the pension sharing order.
7. Practical considerations
7.1. Drafting considerations
The outcome of a pension sharing order will depend on how the pension sharing annex is completed. Small differences in wording or account references can significantly affect how benefits are split, where funds are held across both crystallised and uncrystallised arrangements.
The starting point is the account reference used.
- If the reference relates solely to a crystallised arrangement or solely to an uncrystallised arrangement, the intention is clear and the pension debit will be applied accordingly.
- If the reference provided is an overarching policy number that includes both crystallised and uncrystallised funds, the position will depend on what other information is provided.
In these cases:
- The default position is that the pension debit will be taken proportionately across both crystallised and uncrystallised funds.
- If the intention is for the share to be based on the total policy value but taken only from uncrystallised funds, additional wording should be included.
We suggest including in section C (iv):
“based on total pension value but to be taken from uncrystallised sub-account only”.
This should also be clearly reflected in the financial order. - If the intention is for the share to be based on the total policy value but taken only from crystallised funds, similar wording should be used.
We suggest including in section C (iv):
“based on total pension value but to be taken from crystallised sub-account only”.
Again, this should also be reflected in the financial order.
Where wording does not align with the account referenced, the outcome may differ from what was intended.
7.2. Tax considerations
The following are things you may want to consider when deciding on how to structure or take into account pension sharing.
- Any pension credit derived from crystallised funds is called a disqualifying pension credit. The impact of this is that no pension commencement lump sum (tax‑free cash) will be available to the spouse from this money.
- The member having the pension debit will not receive a reduction to the amount of lump sum or lump sum and death benefit allowance used even though they are giving up pension rights.
- Because most pensions change in value, it is very likely the value used to decide on a percentage or monetary amount to share will not be an accurate accounting at the point the share becomes effective, so you may wish to consider offsetting the pension instead of sharing.
Approver: Quilter August 2026
Q 01393/206/18431
Need more help?
Speak to our experienced team. You can reach them Monday to Friday, 8.30am to 4.30pm, by either calling 02380 726 010 or emailing:
- Pensions technical queries – pensionstechnical@quilter.com
- Life and trust technical queries - taxandtrusts@quilter.com
The information provided in this article is not intended to offer advice.
It is based on Quilter's interpretation of the relevant law and is correct at the date shown. While we believe this interpretation to be correct, we cannot guarantee it. Quilter cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.