So what should financial advisers bear in mind when advising their clients about their pension but want to go through a no-fault divorce?
- Pensions must not be forgotten. All the options should be considered at the time of divorce with the ideal splitting of the pensions’
- The state pension must also be considered because of the changes not allowing the former spouse to retain the benefit of the ex-spouses full contributions. Often a spouse has compromised their state pension because they have not worked or worked part time to look after children. The pensions splitting should also take this into consideration.
Are pension rules inadvertently beneficial to cohabiting couples?
The legal profession has worked hard in recent years to dispel the myth that there is such a thing as a common law marriage (apart from Scotland which have legal provisions for cohabitees like other countries).
Even if a couple live together for a number of years, they do not have any rights under the law if they were to split. Although it has been identified that there should be some protection for cohabitees, there are currently no plans to introduce this into law in the near future.
It is still recommended that couples embark on a civil partnership or marriage, or go to a family lawyer and sign a cohabitation agreement to protect their access to individual and joint assets.
Unusually, when it comes to access to survivors' pensions, this is one of the only areas of family law where it benefits couples to be in a cohabiting relationship.
Widows/widowers who are eligible for their late partner’s pension, in a new relationship but do not remarry will still be able to access payments.
The cases of Brewster and Elmes established that public sector nomination requirement applied to cohabitants constitutes unlawful discrimination and should be disapplied. This does not prevent the pension schemes introducing and enforcing different criteria for married and unmarried members.
However, for individuals who lose a partner they were cohabiting with could be set to gain stronger rights due to a landmark case last year.
After the death of her partner after a 15 year relationship, the judge ruled that Jane Langford should receive financial death benefits, including the final salary pension from The Ministry of Defence.
This was despite never being married to Air Commodore Christopher Green and still being married to her ex-husband, who she had been estranged from for 17 years.
This was a welcome development that could change the lives of many individuals who survive their cohabiting partner. The court decided that the incompatibility for public sector nomination requirement was incompatible with the ECHR (European Court of Human Rights).
The court of appeal carefully confined its findings to the facts of that case.
If financial advisers and family lawyers can work together closely to ensure clients are fully aware of how pension changes could impact their financial and family circumstances, they will be equipped to plan ahead for their future to avoid running into financial difficulties.
Linda Lamb is a solicitor and director of LSL Family Law
