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When couples divorce, pensions are often one of the most valuable assets that must be taken into account. A pension pays you a regular income to live on when you retire. In divorce, nullity, judicial separation or dissolution of a civil partnership, the court has the power to redistribute the benefits derived from pension resources between the parties. A pension sharing report helps ensure these are divided fairly, so that both parties have financial security in retirement. Pension sharing is only available where the court will make a final divorce order. The court cannot make a pension sharing order in judicial separation proceedings.
Why Accurate Pension Valuation Matters
Pensions can vary in value and benefit. A figure provided by the pension company may not reflect the true worth of the scheme of its benefits. A pension sharing report gives a more accurate assessment and helps achieve equality in income at retirement.
When Expert Reports Are Particularly Important
Difficulties often arise when valuing complex pension schemes. Expert reports are particularly important when:
- There are multiple pension schemes such as defined benefit (final salary) or public-sector schemes.
- There is a significant age gap between the parties.
- The combined pension pots exceed £100,000.
- There is a dispute over what pension accrual is considered matrimonial.
Considering Individual Retirement Needs
The court considers each party's further income needs in retirement. For example, if one party is younger and will have longer to invest before retirement, they may need a smaller share now to achieve fairness over time. A pension sharing report is particularly useful when there is a significant disparity between pension values, or where there is a complex or high-value pension scheme involved.
The Role of a Pensions on Divorce Expert (PODE)
It may then become necessary to instruct an independent specialist (known as a Pensions on Divorce Expert, or 'PODE') to value the pensions and advise on the division of pension assets during divorce proceedings. The instruction of a pension expert must be proportionate to the case. An expert report gives a more accurate assessment about the parties' pension provision and pension sharing.
What Aspects Can an Expert Opinion Be Sought On?
- The Pension Sharing Order or Orders that would achieve equalisation of pension benefits in retirement, both in respect of income and lump sum (where possible), based on the current benefits of the parties' pensions.
- The Pension Sharing Order or Orders that would achieve equalisation of pension benefits in retirement, both in respect of income and lump sum (where possible), based on the duration of the marriage.
- The Pension Sharing Order or Orders that would be required to achieve capital equalisation of the parties' pensions based on an assessment of the capital value of the parties' respective pensions.
Legal Framework
The instruction of experts in family proceedings is set out in Part 25 of the Family Procedure Rules (FPR).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
