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This Act introduced stakeholder pensions - see Unit C section 5.
It also provides an additional method of dealing with pension benefits
on divorce.
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Prior to this Act pension rights on divorce could be taken into
account using either offsetting or earmarking. If offsetting is
used the parties agree to offset pension rights against non-pension
assets e.g. house/investments. Using earmarking part of the member's
pension is treated as belonging to the ex-spouse but does not provide
a "clean break". If benefits are earmarked they remain
under the control of the member.
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The new option introduced by the Act was pension sharing (splitting).This
option became available for divorces commenced on or after 1 December
2000.
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Pension sharing is not compulsory. If used, the non-member spouse
becomes entitled to a share of the member's pension. This can be
retained in the member's scheme or taken in the form of a transfer
value.
Pension sharing applies to all pensions except the basic state pension.