Pension Sharing on Divorce – A Fairer Way?

In 2014 a study on the treatment of pensions in divorce found a substantial proportion of potentially unfair financial outcomes.

Of 369 court files used in the study 80% included at least one relevant pension and yet only 14% contained a pension sharing order. Family law specialists confirmed that offsetting pensions against other capital assets remained the most common way of dealing with pensions, but there was little if any agreement on how the pensions or the offset should be valued.

Following on from this study the Pensions Advisory Group (PAG) was formed, made up of family law professionals from a range of disciplines. The aim of the PAG was to produce a good practice guide on the treatment of pensions on divorce, particularly in relation to valuing pensions and offsetting them against other capital assets.

In July 2019, the PAG published its guide and a recent judgment in February 2020 followed  the  recommendations in relation to pension sharing, particularly that the entirety of the pension was to be considered (i.e. pre-marital pension contributions was  not excluded) and the sharing of the pension was  based on sharing equality of income in the future rather than equality of capital or setting off against other assets.

The full judgement can be found here.

It is vital to seek expert legal advice when pensions are involved

For further advice on divorce and family law matters please call 01282 695400 or email Craig@farnworthrose.co.uk