Pension sharing becomes popular

Pension sharing orders are becoming more commonly used on divorce, as separating couples have less other assets to divide.

The legal publisher Sweet & Maxwell is reporting an 11% increase in the number of pension sharing orders in 2010, the latest year for which data is available.

They say that more than one in ten financial settlements ordered by courts include an arrangement to share pension benefits.

This is likely to be in response to the falling value of other assets, including property, as a result of the economic downturn.

There were 82,290 ancillary relief cases in 2010, up 3% on the previous year. 10,205 of these cases involved pension sharing orders which was 9,218 more than in 2009.

Pensions, which have historically represented the second largest family asset, are now in some cases becoming the most valuable asset that needs to be divided on divorce.

A pension sharing order has been an option available to divorcing couples since 1st December 2000, when they were introduced by the Welfare Reform and Pensions Act 1999. Until the availability of pension sharing, the only options for pensions on divorce were earmarking and offsetting.

With pension sharing becoming a more important part of divorce settlements, it is vital that lawyers engage early with a competent independent financial adviser to ensure a fair and suitable distribution of pension assets is achieved.

All too often we are called in to divorce cases once pension sharing orders have been finalised, at a stage in the process where little if anything can be done to assist with suitable agreements.

Photo credit: Flickr/jcoterhals