- In general, pension orders were more likely to be made between older parties from longer marriages.
- Pension sharing orders were more likely to be made when both parties were legally represented.
- Practitioners and judges saw pension sharing as a positive addition to financial remedies on divorce but that offsetting pensions against other non-pension assets was still seen as the most common way of dealing with pensions in general.
This is a matter of concern to practitioners in the field – the second point above only illustrates that we, as a profession, see pensions as being of great significance.
Following on from the findings above, the Pension Advisory Group provided its report on pension sharing in 2019, with a detailed guide on dealing with pensions within financial remedies proceedings.
Despite this invaluable guidance having now been widely circulated, there still seems to be some reluctance to engage with pension sharing on divorce and common confusion in respect of how parties should deal with their respective pensions, including how much is available to them to split and how to obtain an accurate valuation for pension sharing purposes.
Very often, the quoted ‘transfer values’ of defined benefit schemes (also known as ‘final salary’ schemes) significantly understate the value of the benefits in the hand of the receiving spouse.
This usually is for no more obscure reason than differing base assumptions being made by the scheme trustees than by an independently appointed valuer.
However, it can often lead to individuals wrongly neglecting pensions as an asset before and within financial remedies proceedings.
Value and importance of considering pension assets
The importance of considering all pension assets by both parties within financial remedies proceedings cannot be overstated. As the PAG report notes: "Ignoring the pensions… is not an option."
How pension assets are dealt with by parties, and indeed by the court should financial remedies proceedings ensue, will depend on the overall assets of the parties.
There are two different approaches to division of assets that any court must consider: they may either be shared between the parties (usually equally) or, more commonly, awarded so as to meet the parties’ needs.
That latter approach can mean a disproportionate division of the assets in favour of the financially weaker spouse, and it is a mainstay of the orders made on a daily basis in courts up and down the land.
Just as with any other asset, the approach to sharing pensions differs based on whether a sharing or needs-based application is appropriate to any given case.
