Pensions & Divorce - frequently asked questions

A: Anyone who had received a pension sharing order before 6 April 2006 was able to apply for an increase in the lifetime allowance to offset any 'pension credit' entitlement. This enhancement factor is known as “the pre-commencement pension credit factor”. The individual had to notify HMRC by 5 April 2009.

Any 'pension debit' from a pension sharing order received before 6 April 2006 can be ignored.

HMRC Pension Tax Manual: PTM092200 - Protecting Pre-April 2006 pension rights: divorce

A: For pension sharing orders received since 6 April 2006 there are still 'debits' and 'credits'. A 'pension credit' counts towards the lifetime allowance of the ex-spouse. A 'pension debit' doesn't count when testing benefits against the lifetime allowance but it reduces the value of the pension rights to be tested against the lifetime allowance. The rules give everyone their own lifetime allowance and it is only the benefits that they actually receive that will be tested against it.

It is possible to qualify for a pension credit factor that will enhance the ex-spouse or former civil partner's lifetime allowance. To qualify for a pension credit factor the following conditions must be met:

  • the pension credit is held in a registered pension scheme and was acquired on or after 6 April 2006, and
  • it’s derived from a pension benefit from the same or another registered pension scheme that was already in payment to the original member at the time of the pension sharing order, and
  • the original member became entitled to that pension in payment on or after 6 April 2006.

No entitlement to a pension credit factor arises if an individual acquires pension credit rights on or after 6 April 2006 but those rights were derived from:

  • the pension of their ex-husband, ex-wife or former civil partner (the original member) that was in payment at the time of the pension sharing order but which came into payment before 6 April 2006, or
  • rights held by that ex-husband, ex-wife or former civil partner (the original member) that had not been crystallised at the time of the pension sharing order.

HMRC Pension Tax Manual: PTM095200 - lifetime allowance enhancement factors: pension credit factor

A: A Pension Sharing Order can apply to pensions in payment. The capital value of Janet's pension will be shared in the agreed proportions. Her share will then be applied to provide a reduced pension for her, using her current age. Tony's share will be transferred to an uncrystallised pension scheme but with no tax-free lump sum entitlement (as this has already been paid when Janet first took her benefits). This is called a 'disqualifying pension credit'.

A: No he can't. Pension schemes can deal with Pension Sharing Orders by offering external transfers, internal transfers or a choice between the two. Internal transfers are where the ex-spouse joins the scheme as a deferred member. Private sector pension schemes are almost certain to offer external transfers although they could offer an internal transfers as an alternative. However unfunded public sector schemes can only offer internal transfers.

A: No, a pension plan's value can only be split on divorce by means of a Pension Sharing Order issued by a court. This will instruct the pension scheme administrator to transfer the agreed percentage of the pension plan's transfer value to the ex-spouse's pension scheme.


The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.