Pension sharing orders are a valuable but underused resource in divorce, a new study suggests.
Researchers from Cardiff Law School studied 369 divorce court files from different regions in England Wales. They interviewed 32 family solicitors and seven district judges, and pensions data from 130 of the files was also analysed by a pensions expert.
Just 14 per cent of the divorce cases studied included pension sharing orders, the researchers found. Despite this, in 66 per cent of the cases, the parties had disclosed pensions other than the basic state one. In 20 per cent, the divorcing couple only disclosed a basic state pension.
All but two pension sharing orders made were in favour of the wife.
Perhaps unsurprisingly, pension orders were more likely to be been made amongst older couples with more assets, and amongst couples who had received legal advice.
Offsetting pensions against other assets was the most popular approach in divorce, the researchers report.
As pension sharing orders remain relatively uncommon, the majority of husbands, with higher pensions and salaries, were better off financially following divorce than their ex-wives, they found. Women, by contrast, tended to do better on capital following divorce.
The solicitors and judges interviewed described pension sharing orders as a useful addition to the divorce process but also as complex and contentious.
The time and money typically needed to apply for a pensions order is a deterrent, the report declares, and both the solicitors and judges said unrepresented litigants in person were likely to struggle to achieve a fair result on pensions.
The researchers note:
“The UK has one of the most complex pension systems in the world, including state, occupational and privately funded schemes. Retirement provision has become increasingly inadequate and unevenly distributed, with divorced women over 65 particularly exposed, only a minority having any income other than the basic state pension, and their numbers are predicted to increase more than threefold between 2013 and 2033. The introduction of pension sharing powers on divorce in 2000 was intended to help address this issue, but the number of pension sharing orders being made is still only one fifth of original Government predictions, with around 8% of divorces resulting in orders with any formal pension provision.”
The report concludes:
“Pension sharing was a positive addition but remains an under-used financial remedy on divorce and the prerogative of a relatively privileged minority. Although it is usually the wives who are the beneficiaries of pension orders, overall it is the husbands who tend to fare better on the income and pension provisions in final orders and the wives on the capital provisions. Greater rigour and transparency in relation to pension disclosure and the intended effect of final orders might reveal, and thus help to redress, some of this gender imbalance.”