What is a ‘Pension Sharing Order’, and do I need one?
In the UK, whilst there are various options available to factor in a person’s UK occupational or personal pension into a divorce settlement, it is not uncommon for a UK pension sharing order to be obtained. A UK pension sharing order enables a portion of a member’s pension to be deducted and allocated to the ex-spouses own registered (HMRC tax approved) pension scheme. The ex-spouses share can either stay in the existing member’s scheme (if permitted by the scheme rules) or be transferred to another registered (HMRC tax approved) pension scheme. Transferring to a separate scheme is usually the preferred choice for both ex-spouses and UK pension providers as it enables a clean break. Other factors to be considered when determining how to implement a US divorce settlement for a UK pension will be the age of the pension member and whether the UK pension is a defined contribution or defined benefit pension.
If you have a US divorce settlement which requires part of your UK occupational or personal pension to be paid to your ex-spouse, in order for a UK pension provider to implement this settlement, a UK pension sharing order will be required as a US divorce settlement has no legal authority in the UK.