Recent cases demonstrate how pensions are dealt with on divorce

Pensions can be one of the most important assets on divorce, often only second in value to the former matrimonial home. It is therefore essential to know how the courts will deal with them, and two recent cases provide a useful demonstration.

The most important type of order available to the court in relation to pensions is the pension sharing order. Under such an order, a proportion of the pension fund belonging to one spouse is immediately transferred into a pension fund in the name of the other spouse.

The pension sharing order enables the court to deal with the common scenario in which one spouse has a significant pension provision, and the other spouse has little or none. Thus, for example, if all of the pension was accumulated during the marriage, it may be appropriate for there to be a pension sharing order transferring half of the pension fund to the other spouse, thus ‘equalising’ their pensions.

But equalising pensions is not always appropriate.

In the first of the two cases we want to look at the wife was awarded just 25.8% of the husband’s pension, following a marriage that lasted some 12 years. The reason for the wife receiving less than half was that a significant part of the husband’s pension was earned before the marriage.

The wife appealed, arguing essentially that the order had not taken into account her needs, which should take precedence over the fact that the husband accumulated much of the pension prior to the marriage.

The appeal judge accepted that needs could take precedence, but found that the decision was fair, having regard to the fact that the wife had received a higher proportion of the capital assets.

Needs were also a factor in the other case. Here, a husband’s claim for a share of the wife’s pension was struck out by the court, in part because the wife had accumulated a large part of her pension after the parties separated.

The husband appealed. The appeal judge found that the court had failed to take into account the husband’s needs (the husband was aged 59, in poor health and in receipt of benefits). Accordingly, the husband’s appeal was allowed.

Pensions can be a very complex issue on divorce, requiring the help of both legal and financial experts. Family Law Café can put you in touch with the expert assistance you need – for further information, call us on 020 3904 0506, or click here, and fill in the form.

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