PAOs – Benefits & Structure

Pension Benefits & PAOs

  • Pension entitlements are valuable assets and in many cases will be the largest asset after the family home.
  • The dividing of pension assets are only possible by means of a court order and can only be made following a judicial separation or divorce.
  • It is therefore prudent to engage a solicitor to represent your interests and to advise and assist with the legal process.

During the process of separation or divorce, a proportion of your pension benefits may be awarded to your spouse/partner, or vice- versa, or may be set aside for the benefit of a dependant.

Court Orders are made under the Family Law Act 1995 or the Family Law (Divorce) Act 1996 and are referred to as a Pension Adjustment Order (or PAO).

  • Retirement Benefits relate to the accrual of pension rights or the accrual of a pension fund.
  • Contingent Benefits usually relate to Death in Service benefits.
  • A separate PAO must be made for retirement benefits and contingent benefits.
  • A separate PAO must be made for each different pension arrangement in existence at the time of judicial separation or divorce.
  • The court is not obliged to make any order in relation to pension benefits but may do so on application by the non-member of that pension scheme.

How the PAO Works

The PAO will contain 2 pieces of important information.

  • Connector.

    The Relevant Peroid

    This is usually the period from joining the scheme (or date of marriage if later) up to the date of decree of separation/divorce.
    This period can be shorter if required.
    Only pension benefits earned, or contributions made during the relevant period will be taken into account under the PAO.

  • Connector.

    The Relevant Percentage

    This is the percentage of benefits awarded to the non-member.

There are options available to the non-member on receipt of an order.
These can include:-

  • Leaving the benefits until the pension scheme member retires, and take their share of the benefits then, or
  • Transferring the non-member’s value of the pension fund into a pension plan in their own name

There are advantages and disadvantages to both, and the correct path for you will depend on your individual circumstances and the type of pension plan(s) affected. will be happy to provide advice and guidance in this area.

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