The consumer organisation, Which?, has recently published an article with a shocking statistic for family law practitioners to hear – 71% of divorcing couples, since the new no-fault divorce law came into effect on 6 April this year, did not include pensions in their financial settlement. This is despite the Courts in England & Wales making pension sharing orders part of the Welfare Reform and Pensions Act 1999.
The Courts in England & Wales recognise that it is a common scenario for one spouse in a divorce to have a large pension, and the other spouse to have little or no pension at all.
Where pensions are relevant, the Courts have the power to do the following:
- Make a Pension Sharing Order: this requires a proportion of the pension fund of one spouse to be transferred into a pension fund belonging to the other spouse.
- Offset the value of the pension against other assets: this essentially allows the spouse who has the pension to keep it in its entirety, but the other spouse is compensated for the lack of pension share by having a greater share of other assets.
- Make a Pension Attachment Order: although no longer common, this order requires the trustees of the spouse’s pension to pay part of the pension payments to the other spouse, once that pension is in payment. It essentially amounts to a maintenance payment.
The Which? article highlights many spouses sacrificing and failing to protect their pension rights, because of cost considerations and lack of advice from a family law solicitor.
Pension sharing is a complex area and expert advice is required. If you require advice, or more information on the issues raised in this blog, please do not hesitate to contact us at Rayden Solicitors.