Pensions And Divorce

The minimum contributions that employers and staff are to pay into automatic enrolment workplace pensions are to increase from 6 April 2019 (this does not apply to defined benefit pension schemes). From that date, the minimum employer contribution will be 3% (at present it is 2%) and the minimum employee contribution will be 5% (it is 3% at present).

Pensions are relevant to divorce law, in that when a married couple separate, their respective pension entitlements are taken into account in calculating the total matrimonial 'pot' to be shared on divorce.

What is in the matrimonial 'pot'?

All of the assets and liabilities built up during the marriage are 'matrimonial' and are taken in to account in determining the value of the matrimonial 'pot' and how it is to be divided on divorce. The exception to this is gifts received from a third party during the marriage, or inheritance. If, however the gift or inheritance is converted into another asset during the marriage (for instance if it is used to purchase a house) that asset is matrimonial property. In those circumstances, an argument can be advanced that account ought to be taken of the fact that the asset derived from non- matrimonial funds (the gift or inheritance).

In calculating the value of the matrimonial 'pot', the capital value of the parties' pensions is also taken into account- this is known as the 'cash equivalent transfer value'. If the pension began prior...