Pension Transfer After Divorce — Were You Mis-Sold a Pension Following a Pension Sharing Order?
Nadeem Pervazis a solicitor at Edward & Amaury Solicitors, a law firm authorised and regulated by the Solicitors Regulation Authority. Content is reviewed for legal accuracy and compliance with FCA guidance and SRA conduct standards.
TL;DR — Quick Summary
- ▸Pension credits received via a pension sharing order on divorce are subject to the same suitability rules as any other pension — unsuitable advice is claimable.
- ▸Where the pension credit came from a DB/final salary scheme, advice to transfer it out into a SIPP is often unsuitable.
- ▸Advisers with a conflict of interest in divorce proceedings may have given tainted advice.
- ▸Time limits apply — the clock runs from when you knew the advice was unsuitable.
- ▸If the adviser has since failed, FSCS claims up to £85,000 may be available.
Divorce is a period of significant financial change, and pension sharing orders often result in one party receiving substantial pension rights they have little experience managing. Financial advisers were frequently engaged to advise on what to do with those rights — and in many cases, the advice given was unsuitable, particularly where valuable guaranteed DB pension credits were transferred into riskier products.
Quick Answer
If you received a pension credit via a pension sharing order and were then advised to transfer it into a SIPP or other product — and the advice was unsuitable — you may have a significant claim. Contact us for a free, no-obligation review.
Pension Sharing Orders — How They Work
When a court makes a pension sharing order on divorce, a percentage of the pension holder's pension rights is transferred to their former spouse. The recipient receives a "pension credit" — which may be left within the original scheme (as an internal transfer) or transferred to a separate pension arrangement (an external transfer).
The choice between staying in the scheme and transferring externally is consequential — particularly where the original scheme is a defined benefit arrangement providing guaranteed income. Many people were advised to transfer externally when remaining in the scheme would have been more appropriate.
Defined Benefit Pension Credits and Transfer Risk
Where the pension sharing order is made against a DB or final salary pension, the credit carries guaranteed income rights within that scheme. Advice to transfer those rights into a SIPP involves giving up guarantees — and is assessed by the same suitability standards as any other DB transfer. See our guides on defined benefit transfer claims and what a CETV is.