An explanation of how the various orders can operate in practice is given below.

50% pension sharing

  Husband  Wife 
Advantages 
  •  Enables a clean break with no future uncertainty
  • Husband accumulates post-divorce benefits from future service at full rate
  • Can obtain a separate pension fund for retirement
  • Death of husband does not mean loss of pension
  • Wife’s remarriage does not affect right to the pension
  • Can enable a clean break to be achieved 
Disadvantages
  •  The reduction in the husband’s benefits will be made immediately, even though the wife may not immediately receive any benefit
  • Pension debit can have the effect of reducing the husband’s pre-divorce benefits by more than the percentage credited to the spouse
  • Cannot access benefits until age 65*

(*Note: for Court Orders made after 5 April 2009, benefits will be available from age 55) 

50% attachment

  Husband  Wife 
Advantages 
  • If wife remarries she loses right to share of pension income; lump sum element is also variable 
  • Chance to acquire share of gratuity and pension earlier i.e. when husband retires from service
  • Not only does wife receive 50% of pre-divorce benefits but also can receive benefit accumulated after divorce but before retirement 
Disadvantages
  • The percentage applies to benefits on leaving the service, therefore wife can receive not only 50% of pre-divorce benefits but also post-divorce benefits
  • Loses right to pension income if remarries
  • Always open to variation (gratuity) before actual payment; thus no certainty
  • Pension income attachment open to variation both prior to retirement and/or once in payment
  • Pension dies with husband so wife loses benefits if husband pre-deceases

Pension set-off

  Husband  Wife 
Advantages 
  • Can preserve pension benefits in full
  • Can achieve a clean break
  • Can work out a settlement to suit circumstances
  • Can enable wife to gain greater share of existing capital
  • Can work out settlement to suit circumstances 
Disadvantages 
  •  Where value of pension exceeds other capital, his right to that capital can be wiped out, leaving him with no capital to start again
  • Wife may accept settlement of capital which is lower than the true long-term value of the pension 

Both

Although there can be advantages to both parties it is important that the set off is fair.  Both parties should ensure that the CETV is an accurate valuation of the true underlying value of the benefits – an actuaries report may be necessary for this.