In England and Wales, there is no time limit for making a claim against your ex-spouse’s pension following divorce, as long as a financial order has not already been made. Either party can make a claim against their ex-spouses pension even years after the breakdown in marriage. With pensions being one of the most valuable assets in a marriage, it is not uncommon for ex-spouses to make a claim against the other’s pension. It is not uncommon to see these claims being made years after a divorce has been finalised.
Unfortunately, many divorcing couples overlook pensions when sorting out finances on separation. This can be a huge mistake, as pensions are often valuable and provide security and sometimes a guaranteed stream income upon retirement. Ideally, all issues arising from the breakdown of a marriage should be dealt with as soon as possible following separation. This allows both parties to move forward into the future with certainty as to their financial position, and without worrying about a later claim by an ex-spouse.
Making a claim against your ex-spouse’s pension after years or decades have elapsed since divorce can become complex and you will need to set out clearly why you have not made a claim sooner.
Below is a list of considerations for the court upon receiving your claim against your ex-spouse’s pension made some time after the divorce:-
- The length of time since the divorce: the more time that has passed, the more likely it is that the court will question the fairness of allowing a late claim to be made.
- the reason for the late claim: the court will want to understand why the claim is being made so long after the divorce
- any final order that may have been made in previous financial proceedings and whether it relinquishes your right to claim against the pension.
How are pensions split in a divorce?
When sorting out finances, pensions accrued by either party to a marriage are put into the metaphorical ‘matrimonial pot’ comprising everything you and your ex-spouse owned throughout the marriage. Pensions accrued before the marriage, or after separation, may also be available for sharing, depending on the circumstances of the case.
The way in which the pensions can be dealt with upon divorce is by way of:-
- Pension Sharing:- An order made by the court setting out how pensions are to be shared between spouses. A Pension Sharing Order tells the providers of a pension fund to transfer a percentage of the value of the pension/s to the chosen pension scheme of the other spouse.
- Pension Offsetting:- A spouse surrenders their claim against the other’s pension in exchange for assets of a similar value.
- Pension Attachment:- An order made by the court providing for a percentage of a pension to be sent to the other spouse each week or month. The spouse receiving the benefit has to wait until the pension is in payment before they benefit from it. These orders have their drawbacks as they lack financial certainty for the receiving spouse and do not allow for there to be a clean break.
How to protect future claims against pension?
The best way to protect your position and prevent your ex-spouse from making a claim against your pension in the future is to resolve financial issues as soon as possible and ensure the agreement is set out in a Court order. The agreement should address all financial issues, including pensions. It may be that one of the options listed above are utilised in respect of dividing pensions, or it may be that you record that each spouse is to retain their own pension provision. Either way, as long as there is a final binding order in place providing for a clean break then you are protected against future claims.
You may also consider a Pre-Nuptial Agreement, setting out how assets including pensions are to be divided in the event of future divorce. There are stringent requirements to follow for the court to give effect to a Pre-Nuptial Agreement and as the name suggests, it must be agreed between the spouses and freely entered into. A Pre-Nuptial Agreement is not in itself a legally enforceable document, however it can act as a strong protective measure for parties entering into it. This is a complex area of law and you should seek specialist legal advice.
What are a spouses right to pensions?
Often pensions are overlooked by divorcing couples, and this disproportionately impacts women. Pensions are available for sharing between spouses and should not be disregarded. Working out what you may be entitled to may be determined by, but not limited to, consideration of the following:-
- length of the marriage and age of the parties
- any dependent children and consideration of who will be their primary carer
- income, earning capacity and needs of both parties
- contributions made towards the marriage.
The starting point as to the division of assets upon the breakdown of a marriage is 50:50, and this applies to pensions however the factors listed above can be used to depart from this starting point.
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The options discussed above can help you in protecting your retirement position if you are going through a divorce. If you require further advice, speak with a family law solicitor today.