MONEY Divorcing your pension too?

COUNT YOUR CHICKENS Pensions are increasingly being seen as the prize asset when it comes to division of a couple’s wealth.


Pensions potentially more valuable asset than home in divorce


Family law
Brid Manifold

My husband and I have decided to separate. Things have been very difficult financially for us, as I had a long illness and have only recently returned to work part time. I did manage to look after the children through my illness with help from my husband, as he works as a teacher. My husband is willing to leave me the house, but I am worried: How I will manage after he moves out?

In the aftermath of the difficult decision to separate or divorce, the surviving parties typically cling to the rock of the family home as the symbol of greatest security and traditionally the most valuable asset of the family.
A potentially much more valuable asset, however, is the pension of one or both parties. Because of this, the courts are increasingly looking at pensions as a way to provide for two adults and children post divorce. With property values rapidly declining here in Mayo and all over the country, this invisible and even intangible asset may well emerge as the prize asset when it comes to division of a couple’s wealth.
The Family Law Acts require the courts to take pension benefits into account when arriving at financial settlements in divorce and judicial separation cases. The court does this by way of a Pension Adjustment Order in favour of the non-member spouse.
Pension Adjustment Order can only be issued from the courts; pension trustees cannot give effect to agreements made between spouses, for example in a separation agreement.
Pension Adjustment Orders generally divide into two categories: Contingent Benefits, where the member dies in service, before retirement; and Retirement Benefits, where the member survives into retirement.
When making a Pension Adjustment Order, the court has two calculations to make, firstly the relevant period during which the benefits were earned, typically this is from the date of the marriage up the date of the divorce or separation and secondly, the percentage of the benefits to be allocated to the non-member spouse. This could be as much as 90 per cent or 100 per cent or as little as .001 per cent, where the intention is to provide no benefit but simply to extinguish the former spouse’s entitlement.
A Pension Adjustment Order can be sought even after a divorce, but it will not be granted to a spouse who has remarried. A Contingent Benefit Order, however, can be applied for up to one year after the date of the divorce. Remember too, that you don’t have to be married: Pension rights have been extended not only to civil partners and but also qualified cohabitants since the coming into force of the Civil Partnership Act 2010.
Very often, people have poor actual knowledge of the value of their own, let alone their spouse’s pension. Many have no idea of what the estimated payments are on retirement. In the context of marriage breakdown, overlook this asset at your peril.
For the spouse in the eye of the storm who may be clinging for survival to the family home – watch out. The initial joy and relief at being left with the family home may quickly vanish as your ex sails into the sunset buoyed up by a pension plan that will provide a comfortable retirement free of the worry of negative equity and painfully unsustainable mortgage repayments. Something to chew on.

Brid Manifold is a family-law solicitor and mediator based in Galway City. Her monthly columns will cover a range of family-law and mediation issues. Email your questions in confidence to Brid at
familylaw@mayonews.ie.