Divorce and Pensions Reform
The Divorce, Dissolution and Separation Bill is making its way steadily through Parliament. This week it entered the report stage in the House of Lords where it will undergo line by line scrutiny. After that it will get a third reading in the House of Lords, before it is sent back to the House of Commons.
This is the bill which will introduce no fault divorce, and as I have commented in previous posts, most specialist divorce solicitors welcome it and think the change is long overdue. Twice it looked as if it was not going to make it through Parliament – first when Parliament was prorogued, second when Parliament was dissolved ahead of the December 2019 general election.
Simon Davis, President of the Law Society which is the solicitors’ professional body, has flagged up another issue concerning pension sharing orders in divorce. On behalf of the profession he has said this: –
‘If couples choose to divide their pension using a pension-sharing order and a spouse passes away after the final divorce is granted before the order comes into effect, there is a chance the order could fail. As the divorce has been finalised, their ex-partner would also be unable to claim as a widow or widower – leaving them financially vulnerable.
‘The [bill] should be amended so that a final divorce order cannot be granted until the pension sharing order has taken effect – ensuring no party faces unfair financial burdens.’
Solicitors who specialise in complex financial disputes arising from divorce have been aware of this issue for a long time. There is a window of time between the date when a pension sharing order is made and the date when it is implemented. If the person against whom the pension sharing order is made dies during that window, then the person in whose favour it was made can be in a very difficult position particularly if there has already been a decree absolute of divorce. It is statistically very unlikely to happen, but it crops up from time to time. There are solutions or potential solutions, and anyone who finds themselves in that position should talk to a lawyer who specialises the subject of pensions and divorce.
Solicitors who work with pensions in divorce have been aware of this point for several years, and we help our clients to time the decree absolute, and the pension sharing order, to keep the window of risk as small as possible. But it is only a partial solution.
So, it would be good to use the opportunity presented by this bill, to try to address this issue, but it takes us away from the main purpose of the bill, and it would not be easy. Under present rules the pension sharing order cannot be implemented until there has been a decree absolute, so Simon’s suggested solution, which is to say that the decree cannot be made absolute until the pension sharing order has been implemented seems to me to be impossible under the scheme as it works at present. What seems like a simple solution would involve detailed amendment of several parts of the law. Any change to the law about pension sharing is quite difficult, because it involves consultation with the pensions industry. Professionals in the pension industry are quite resistant to change, for a perfectly good reason from their perspective. Their job is to administer the nation’s pensions, not to worry about the social and economic consequences of divorce.
So, whilst I agree with Simon that it would be good to review the law relating to pensions in divorce, this may not be the right time to do it. The risk is that the bill would get bogged down in consultation processes, and never become law. Changes to the rules about pensions and divorce might be better left to another time.
John Pratley is an expert divorce lawyer, who has more than 25 years experience advising clients purely about divorce and related family law issues, such as the financial consequences of separating and divorcing. After establishing the first niche family law practice in Bristol, and going on to senior management roles in a national firm, John set up Apple Tree Family Law in 2018. Apple tree family Law solicitors specialise in advice about divorce and financial issues.
We are based in Bristol and Exeter, but we have clients all over the UK and further afield. We offer, simply, clear and accurate advice about divorce and family law issues, and the very best client service, for a clear and reasonable price