Pension Sharing
The Pensions Act 1995 introduced changes to the position of pensions on divorce, which came into force during 1996. The new legislation, known as Pension Sharing, formed part of the Welfare Reform and Pensions Act 1999 and affects divorce actions commencing after the 1st December 2000. Pension Sharing splits benefits between the divorcing couple at the date of the divorce. There are two possible methods of Pension Sharing:-
An external transfer, which allows the ex-spouse to take their share of the benefits and transfer to a pension of their choice;
An internal transfer, which gives the ex-spouse membership within the occupational pension scheme (OPS) in their own right.
Transfer into the ex-spouse's Occupational Pension Scheme
An employer's pension scheme is under no legal obligation to accept a pension transfer. For example, Local Government Pension Scheme (LGPS) Regulations do not permit the transfer of a 'pension credit' arrangement into the LGPS.
Transfer to a Personal Pension Plan (PPP) or Stakeholder Pension Plan (SPP)
The PPP and SPP are both collective investment vehicles where investors pool their money together, which is then managed by professional fund managers. With occupational pension schemes, the Trustees decide on where to invest the assets of the pension fund. Usually, the member has no choice. With the PPP/SPP, the member has the ultimate choice on where to invest their funds.
Another option would be to transfer into a Section 32 Buy-Out policy.