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Allocation Of Pension Rights

In the recent case of H – v – H 2020, 3 main issues had to be determined by the Court.

The Wife was 50 and the Husband was 48. They lived together from 1999, married in 2005 and separated in 2016. In total a relationship of 17 years. They had 3 children.

The liquid capital assets were modest. They had equity in the family home of £240,000, the Wife had assets of £64,000 and the Husband had assets of £53,000. In contrast, the pension assets were very valuable. The Wife had pension of £139,000 and £14,000. The Husband had pensions of £2,155,000 and £59,000.

The issues were:

1.   Whether the Court should divide the pensions based on capital or income;

2.   Whether to exclude a part of a pension if it was earned before the marriage;

3.   Should the Court aim to separate liquid capital assets and pensions and equally divide the pensions rather than attempt to offset the pension against other capital assets.

The Court decided to divide the pensions to provide equality of income for the Wife and Husband. The Court decided that if the Husband’s pension that had accrued prior to the marriage (58%) was excluded then the Wife’s needs could not be met. The Pension Sharing Order was therefore applied to all the Husband’s pension rights.

A discount for non-matrimonial assets appears an unlikely outcome in a marriage of any material length.

As to offsetting, the Court noted that many attempt to blur the line between liquid capital assets and pensions and this runs a risk of unfairness because valuation issues become very difficult and it may be unfair to burden one party with a non-realisable asset. This case indicates that liquid capital assets and pensions should be treated separately as long as this does not produce an unfair outcome.

The Judgment makes clear that the Pensions Advisory Group Report known as “A Guide to Treatment of Pensions on Divorce” published in July 2019 should be considered very persuasive in the areas that were in dispute. The Family Team at  Clough & Willis are familiar with the contents of this detailed Report and can provide you with up to date knowledge and advice concerning all aspects of your pension rights.