PENSION SHARING ON DIVORCE

When considering financial settlement, on a divorce, all matrimonial assets are considered. Included in these (sometimes as the largest of all assets) is the pension of either or both parties.

The Court has various powers. It can either “offset” i.e. give to the non-pensioned party an equivalent value in another asset, perhaps the house. Since 1996, the Court has been able to earmark the pension so that, when ready to pay to the pensioner, a part which has previously been marked by the court on divorce, will be paid directly to the ex-spouse. Both of these powers are still available, and offsetting can be used in conjunction with the new power of pension sharing. Pension earmarking cannot be used with pension sharing.

In the case of all divorces started on or after 1st December 2000, a spouse can benefit with immediate effect from the other spouse’s pension fund. The Court now looks at the one spouse’s “right” to the other’s pension when considering the financial aspects of divorce rather than (as previously) based more purely on a “need”.

Pension sharing is only possible by an order of the Court, and once Decree Absolute has been pronounced, it cannot be varied.

Since the end of October 2000, following a decision in the House of Lords, the division of assets on divorce will more often be decided by rights established by the marriage, and couples no longer have to establish reasonable requirements. To satisfy the need to share all assets, it can be very helpful to have the pension available for sharing.