Spouses can agree almost everything in a separation between themselves: the house, maintenance, the contents of the sheds. The single asset they cannot deal with by agreement alone is the pension, because pension trustees act only on a court order. That order is the pension adjustment order, and it deserves more attention than it usually gets.
How designation works
A pension adjustment order over retirement benefits designates part of the member spouse's benefit for the other spouse, defined by two variables: the period of reckonable service taken into account and the percentage of the benefit accrued in that period. The designated benefit can generally remain in the scheme, growing and payable when the member's benefits come into payment, or be transferred to an arrangement in the beneficiary's own name, giving independence from the former spouse's career decisions. Separate orders can address contingent benefits, the death-in-service lump sum that would otherwise pass under scheme rules.
The strategic uses
Pension adjustment orders are the balancing weight of asset-heavy settlements: they move substantial value without touching land, company shares or the family home, which is why they feature so prominently in farm and business cases. They are also the standard tool of finality in the other direction: nominal or nil orders over each spouse's schemes close off future pension claims where a clean break in substance is intended.
Where they go wrong
The failures are clerical and fatal: the wrong scheme named, trustees not notified, the order not served in time, percentages that made sense against one valuation applied to a different benefit. Every settlement involving pensions should be built on current trustee statements and checked against the scheme's actual rules before ruling. Tax treatment of pension benefits is a matter for specialist tax advice.
This article is general information, not legal advice. For the full practice area, see Pensions on Divorce, or contact the practice to discuss a matter in confidence.