Pensions on Divorce

Pensions on Divorce

A number of recently decided cases this year  have helped to add some clarity to how the court  deal with pensions and  also reflect issues addressed in the Pensions Advisory Group Report from July 2019. They included; whether the division of pensions should be on an income or capital basis, how to deal with pension accrued before marriage and during long periods of separation, and whether to offset capital against pension sharing.

The court’s decision included the following propositions;

  1. If the value of the pension is relatively small and parties are young a division on capital value basis would be appropriate.
  2. Sometimes a capital value split does not achieve a fair situation especially when pension assets have a larger value or are part of a defined benefit scheme or if parties are close to retirement.
  3. If a husband or wife is arguing that the case is one where their needs are a significant factor a division to achieve equality of income is likely to be the correct approach.
  4. If a spouse argues their needs are relevant equality may not always be a fair result and other factors such as contributions, health, age, and length of marriage have to be weighed in the final decision. This may result in what is considered as non-matrimonial acquired pension assets whether pre marriage or post separation, falling within the assets to be shared.
  5. Defined benefit pensions accrue greater benefits as the individual’s income increase so a calculation of years contributed pre or post marriage does not always work.
  6. Comparing pensions with other assets is not always correct so choosing to forego a share of a pension for more out of other capital assets may not be the right solution.

What is certain is that pensions often form significant assets to be considered on financial negotiation on marriage breakdown and should not be ignored.

If you need  advice on issues relating to this, please contact our  Family team on 0161 665 3502.

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