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Minister of State (Department for Work and Pensions) Steve Webb, had a few things to say about pensions recently. Some of them were aimed at divorce lawyers.
The minister was speaking in February on the day of the conference of the Resolution Foundation, the think-tank aimed at raising British living standards. According to reports, Mr Webb said divorce lawyers should be ‘encouraged to always make sure this is properly part of the negotiations and is on the table’. He then added, 'In theory we have pension sharing on divorce and pension splitting but the reality is that it doesn’t work terribly well. Your average divorce lawyer is focused on the house and, if you have still got kids, are you really going to haggle hard over a share of the pension?’.
Quite why Mr Webb decided to pillory divorce lawyers is not entirely clear. Was this just usual lawyer bashing by a politician or did it have any justification?
Certainly the picture is a complex one. Scottish Widows publishes an annual Women and Pensions Report. Its 2014 publication found that women typically save £100 a month for retirement, around 40% less than men, a gap that is widening. Among divorced women, 84% either said pensions weren’t discussed, or that they couldn’t remember them being discussed, as part of any settlement. This is apparently despite the fact that more women than men think they would be entitled to a share of their partner’s pension if they were to split up.
Hilary Woodward and Mark Sefton at Cardiff Law School recently made the first detailed study into pension sharing on divorce since its introduction in 2000. Pensions on divorce: an empirical study was published in 2014. The study was designed to provide an insight into when and how pensions are included in final divorce financial remedy orders. The authors noted that 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.
Of the 369 court files studied, 20% disclosed no relevant pensions, 66% disclosed one or more relevant pensions for either spouse or both but no pension orders, and 14% included one or more pension orders. Pensions were expressly referred to in the final order in 98% of the cases in which relevant pensions were disclosed, but over three quarters of those were for dismissal purposes only. Pension orders were made in 51 cases, representing 17% of cases with relevant pensions.
The findings included the following: 'Few practitioners admitted to ever ignoring the pensions save where the parties were very young and/or the pensions of negligible value. They did not see the issue of pensions as particularly contentious for their clients but did almost universally see it as one of the most complex and least well understood by public and professionals alike.'
The study found that pension orders were also more likely, three times as likely, to be made in cases in which both parties were legally represented: 23% of cases in which both parties were represented included a pension order compared to 8% of cases in which only one or neither party was represented.
The Cardiff study was based on data collected from court files in 2011. Were it to be carried out now, after the wholesale wind-down of legal aid, it would have found a good many more parties unrepresented. This rise in the proportion of litigants in person makes its finding on the instance of pension sharing orders and the unrepresented party truly alarming. The study is required reading for any divorce lawyer.
The authors of Pensions on divorce carried out a number of interviews with family lawyers and judges dealing with financial orders on divorce. Its summary states that better training on pension issues and financial remedies would be beneficial. However, it feels that the benefit would extend to both practitioners and judges. It adds, 'More guidance from case law on pension issues would undoubtedly assist all concerned'.
One thing that might help would be to include much more information about pensions on divorce in the useful Law Society's Family Law Protocol, now in its third edition.
In the meantime, Resolution’s Manifesto for Family Law, sets out what the next government should do in order to improve the lives of separating and separated families. It identifies six key areas where it says changes are needed to our family justice system. Amongst these, clear guidelines are needed on the division of capital resources and pensions, it says. Perhaps the minister's own political party, along with the others, might pay attention to this.
Tony Roe is a solicitor and family law arbitrator at Tony Roe Solicitors, Berkshire
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