Pension sharing is used to transfer some of a pension to the other party.  It is not necessary to only share 50% of the pension in this way, any proportion of the pension, all the way up to 100%, may be shared.

Pension sharing is used as part of dividing out the matrimonial assets between the two parties.  It is the normal approach used when the division requires some of the pension assets of one party to be transfered to the other.

Sometimes pensions, and other difficult to realise assest such as businesses, are "ring-fenced" from the assets readily realisable for cash and both parts are dealt with separately.  Each bit may then be divided 50/50 independently, and this normally leads to a pension share.  We do not recommended "ring-fencing" for the reason explained below.

In Scotland only pensions accrued during marriage are included in the matrimonial assets for division.  There are specific rules defining the start and end dates of the marriage for this purpose, and a pension sharing order must be expressed in terms of the number of pounds of CETV to be shared, rather than the percentage of the CETV.

There are issues with pension sharing.

• The biggest issue is that sharing 50% of the CETV of a defined benefit pension or pension in payment to a spouse will not produce an equal split of benefits between the two parties.  This is to do with the different ways schemes implement pension sharing orders.
• Pension sharing can lose both parties money, depending on the way the scheme implements the share.  It is for this reason we do not recommend "ring-fencing" pensions before all the facts are known.  For this reason our reports always show the size of any loss, and give alternative values for offsetting.
• There are immediate expenses when sharing from the scheme, solicitor and actuary.
• Some schemes provide the pension credit as an external transfer value, which the receiving party will have to invest until their pension can be taken
• Some schemes retain the pension within the scheme and only allow the receiving party to start their pension at a specific age