Before 1996 the pension was an asset which was seemingly ‘untouchable' in a divorce financial settlement, but there was concern among family law practitioners and divorce solicitors that women divorcees who, having spent many years looking after children and homes, were left with little or no provision for their later years if their relationship broke down.

Section 166 of the Pension Act 1995 finally reinforced the family law court's duty to give full consideration to the pension rights of a divorced non-scheme member and on 1st August 1996, pension attachment orders were initiated to deal with pension assets in ancillary relief proceedings.

Attachment order or ‘earmarking' – there may be pension problems

Also sometimes known as pension ‘earmarking', a pension attachment order requires the family law court to allocate a portion of the pension fund to the non-scheme member spouse, payable as a lump sum or periodical payments when their ex-spouse retires.

This ultimately means that a pension attachment order cannot be part of any ‘clean break' financial settlement on divorce because it creates a financial commitment between the divorced parties.

It may also mean that the non-pensioned spouse will be forced to wait for some time before they receive any benefit from the pension assets which may be more urgently required immediately after the divorce.

Pension attachment orders were also found to be at risk of manipulation by the scheme-member spouse who, in certain circumstances, could change the value of the asset by altering their contributions to the scheme. And, in some cases, where the age of retirement was not specified by the scheme, members chose not to retire when it would have been expected that the asset would have become payable.

It is also problematic that the court must be particularly speculative when calculating the division of the pension, as there is no way of being able to predict the needs of the parties at the time the asset becomes payable, or what the full value of the pension fund will be.

Divorce solicitors can advise on pensions in ancillary relief packages

Dividing a pension in a financial settlement on divorce presents a convoluted legal and mathematical problem and, as such, the advice of an experienced family law solicitor is essential.

If the pension fund is of little value it may be appropriate to consider seeking a pension attachment order, particularly if the fund is likely to increase in value significantly by the retirement date, or if the non-pensioned spouse is unlikely to be able to amass their own funds for retirement. However, if the fund represents a significant stand-alone asset, there are several ways the parties to the divorce may see that asset divided.

Here at Healys our highly skilled team of family law solicitors offers sensitive, yet straightforward advice to ensure our clients receive the most favourable outcome from their divorce financial settlement and are well versed in this complex area of family law.

Based in offices in London and Brighton, we advise clients all over the UK and from further afield.
If you would like to discuss pensions as part of your ancillary relief package or any legal issue arising from relationship breakdown please call Catherine Taylor on 01273 669 124 or e-mail on catherine.taylor@healys.com