Divorce and pensions

The Court has the power to make certain orders with regard to the pension fund. All Petitions issued prior to 30 November 2000 will provide that the court will have power to either:

• settle a pension by making the appropriate adjustment in the capital settlement; or
• make an Ear-Marking Order

All Petitions issued on or after 1 December 2000 will provide the court with the additional power to make Pension Sharing Orders.

Valuation

Both parties should agree on a mutually acceptable percentage or proportionate split. If this proves impossible, then it will be for the court to determine the equitable method. The court will consider the value of the pension to be the current estimated transfer value at the time of divorce. The court will also look at the rights accrued during the period of the marriage. However, this is subject to its own discretion.

Ear-Marking

Where an Ear-Marking order is made, it will provide that upon receipt of the pension, part of the monthly payment/lump sum payment will be ear-marked to the other spouse by way of either a periodic payment order (monthly maintenance) and/or a lump sum order (one-off payment from lump sum received).

Pension Sharing

Where a Pension Sharing Order is made, it will order a certain proportion of the scheme members= benefits to that person's divorcing spouse at the time of the divorce settlement. The money will not be received until the benefits under the scheme become payable within the scheme age parameters.

Summary

In the short term it seems unlikely that Pension Sharing Orders will be preferred by the courts over set-off arrangements. However, it is anticipated that pension sharing will become more of an accepted strategy by which pension claims will be satisfied as the pension should not be treated as a future source of income but a current asset which should accordingly be considered capable and even desirable of sharing at the time of divorce.

Further advice should be sought from your solicitors and consideration will be given as to whether expert evidence is required.

If you require further advice, please ask a question or call us on 0800 066 99 20

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