This includes, for example, the use of spousal maintenance, delays in the pronouncement of a final order of divorce (thereby delaying implementation of a pension sharing order), alongside other creative and generally uncommon solutions. However, all such methods can be convoluted, risky and often require a high degree of trust between parties.
What PAG2 underlines is the importance of parties obtaining bespoke and appropriate financial advice tailored to their specific circumstances. Recent developments in the law only reinforce this.
Most matrimonial practitioners are aware of the need to signpost their clients to financial advisers in this area and involve them in such matters from as early a stage as possible.
Part four of PAG2 deals with the treatment of pensions in needs-based and sharing cases. This has been updated to clarify that before assessing whether to exclude pre-marital accrual, the relevant section 25 factors should be considered. This ought to include the parties’ retirement incomes.
It also reiterates that, where apportionment is justified, the date for commencement of apportionment will typically be the date of commencement of “seamless cohabitation”, rather than the date of marriage.
PAG2 makes clear that “[t]here is no reason why pensions should be equalised to a greater or lesser extent than other resources. As Lord Nicholls noted in White, while judges would always be well advised to check their tentative views against the yardstick of equality of division, more often than not, a fair outcome will be one that – for good reason – produces an overall division of assets that is unequal.”
It goes on to say that, “just as with non-pension assets, there will be many cases in which equality (whether of CE, other pension capital valuation or income) will not be the fair result, whether because of the parties’ respective needs, contributions, health, ages, the length of the marriage, or – in non-needs cases – the non-matrimonial nature of the pension assets”.
PAG2 further identifies specific cases where equal division may not be appropriate.
The impact of pension freedoms is also explored in more detail. Such changes may allow greater access to capital from defined contribution pots – although the age at which such funds can be accessed is of course expected to increase from 55 to 57 in 2028.
Pension commencement lump sums may also allow for capital to be realised and such resources will be relevant in the event of separation.
PAG2 contains detailed appendices and helpful notes for practitioners, offering technical updates, useful resources, and a draft letter of instruction to pensions on divorce experts.
