A PODE is a Pension on Divorce Expert. A PODE is usually an actuary who values pensions properly and works out a fair way to share them. You need one where the pensions are large or complex. A report costs roughly £1,500 to £3,000 and the cost is usually shared. This guide explains what a PODE does. It shows when you need one. It explains how pensions are divided on divorce.
What is a PODE?
A PODE is a Pension on Divorce Expert. The expert is usually a qualified actuary. Their job is to value the pensions in a divorce and to advise on how to share them fairly. The family court appoints a PODE as a single joint expert under the rules on expert evidence. Both parties instruct the expert together and both share the report.
Why is valuing a pension so difficult?
A pension is hard to value because the headline figure can be misleading. The starting point is the cash equivalent value. This is sometimes called the CETV. Your provider gives you this figure on request. For a straightforward workplace pension it gives a reasonable picture. For a defined benefit or final salary scheme it can understate the true value by a wide margin.
Public sector pensions are the clearest example. The schemes for the NHS teachers police armed forces and local government provide a guaranteed income for life. The cash equivalent often fails to reflect what that guarantee is really worth. Treating it like cash in the bank can leave one person far worse off. In basic terms, this is the gap a PODE is there to close.
When do you need a PODE?
You need a PODE where the pensions are valuable or complex. The Pension Advisory Group sets out the situations that point to a report. The clearest triggers are below.
- The total defined benefit pension value is more than £100,000.
- One person has a public sector or uniformed service pension.
- The fair outcome is to equalise pension income in retirement rather than capital.
- Part of the pension was built up before the relationship and needs separating out.
- The pension is a large share of the total assets.
If none of these apply and you both have simple modern pensions of similar size you may not need a PODE at all. An experienced solicitor can tell you whether a report is proportionate in your case.
How much does a PODE report cost?
A PODE report usually costs between £1,500 and £3,000. The exact figure depends on how many pensions are involved and how complex they are. The cost is normally shared equally between you because you both rely on the same report.
This is money well spent in the right case. A contested final hearing costs far more. Guessing at the value of a public sector pension and getting it wrong can cost one party tens of thousands of pounds in lost retirement income. The report is the cheaper risk.
How are pensions shared on divorce?
There are three ways to deal with a pension on divorce.
A pension sharing order. A percentage of one person’s pension is transferred to the other. This is the most common and usually the fairest method. It allows a clean break.
Offsetting. One person keeps their pension in full. The other is compensated with a larger share of another asset such as the house. This needs careful valuation because you are comparing a pension with cash.
Pension attachment. A share of the pension is paid to the other person when it comes into payment. This is rarely used now. The payments stop if the receiving person remarries and on the death of the pension holder. It does not allow a clean break.
What is a pension sharing order?
A pension sharing order is a court order that moves a percentage of one pension into the other person’s name. The power comes from the Welfare Reform and Pensions Act 1999. The order must share a percentage and not a fixed sum. It is attached to the financial order as a pension sharing annex; Form P1.
The order takes effect on the later of the final divorce order or 28 days after the pension sharing order is made. The pension provider must then implement it within four months. The result is a separate pension in the receiving person’s own name.
Can you ignore pensions to save money?
No. You cannot leave pensions out to save time or cost. Both of you must disclose every pension as part of full financial disclosure. A court will not approve a financial order without it. Pensions are often the largest asset in a marriage after the home and are routinely overlooked. Ignoring them is not a saving. It is a risk to your retirement. How pensions are shared sits within the wider duty on the court to reach a fair outcome under section 25 of the Matrimonial Causes Act 1973.
Key takeaways
- A PODE is a Pension on Divorce Expert who is usually an actuary.
- The cash equivalent value can badly understate a defined benefit or public sector pension.
- You usually need a PODE where the defined benefit value tops £100,000 or a public sector pension is involved.
- A report costs roughly £1,500 to £3,000 and is normally shared.
- A pension sharing order is the most common and usually the fairest way to share a pension.
- Every pension must be disclosed. Ignoring pensions is a risk not a saving.
Frequently asked questions
What is a PODE? A PODE is a Pension on Divorce Expert. The expert is usually an actuary who values pensions and advises on a fair way to share them.
When do you need a pension on divorce expert? You usually need one where the defined benefit pension value(s) tops £100,000, where there is a public sector pension, or where pension income needs to be equalised.
How much does a PODE report cost? A PODE report usually costs between £1,500 and £3,000. The cost is normally shared equally between both parties.
What is the most common way to share a pension on divorce? A pension sharing order. A percentage of one pension is transferred into the other person’s name, which allows a clean break.
Do you have to include pensions in a divorce settlement? Yes. Every pension must be disclosed. A court will not approve a financial order without full pension disclosure.