Pension sharing applies to all pensions, apart from the state basic old age pension and the new state pension (except any protected payment).

All pension benefits are valued (see CETV below). The share can be granted by way of a transfer to from one scheme to another, or by one party becoming a ‘paid up’ member of the other’s company pension scheme.

This latter option is rarely used, as the retaining scheme will not wish to have the increased costs, disclosure requirements and administrative inconvenience associated with additional members (non-employees).

The rules allow schemes to insist on ‘buying out’ the spouse’s benefits, if the scheme considers it appropriate. Most schemes insist on this route. The exception is usually the government and Local Authority schemes, which are ‘pay as you go’ (unfunded except for the local government scheme) and therefore reluctant to pay large transfer values.

Pensions that are already in payment (eg. through an annuity) can be ‘unbought’, split and ‘rebought’ using the annuity rates applicable at the date of divorce.

The biggest problem with pension sharing is the cost. Schemes are entitled to charge for the calculations and administration involved in splitting the benefits. The recipient must also consider the cost of any required financial advice, which may make the entire process uneconomical.

At present, little consideration has been given to “co-habitant” relationships, although it is the subject of significant lobbying.