This blog is intended to encourage an exchange of ideas and promote debate about the financial issues that arise in a relationship breakdown. The concept is to create a platform for discussion that is not available elsewhere. Aimed mainly at professionals working in this area; lawyers, accountants, financial advisors and actuaries, it is also a potential source of information for the general public.
In our experience there is a significant variance in how professionals handle pension assets in divorce, with little consensus on which methods give the best outcome. We feel this is due in part to a lack of centralised knowledge and debate on what can be a complex issue. We intend to address this by posting our original articles on key subjects, as well as those contributed by others. Our intention is to post quality, discussion-worthy topics at least once a month, or more often if the need arises.
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The Law Commission is consulting on Marital Property Agreements http://www.lawcom.gov.uk/docs/cp198.pdf. There are possible implications for how pensions are dealt with on divorce and dissolution. Some discussion here may assist those who will formally contribute to the consultation process.
Two examples will illustrate the challenges.
Example 1. One party has a substantial deferred pension in a dc fund on marriage, although no further contributions are made due entirely to a successful investment strategy, the value of the pension fund has increased significantly by the time they divorce. How would the increase in value be dealt with?
Example 2. There is a salary related defined benefit pension. On marriage, the pension has a reasonable value. Over the period of the marriage promotion to the top of the organisation and attendant salary increases have significantly increased the value of the pension. Due to the salary linking effect, the value of the pension accrued pre-marriage is determined by the member’s current pensionable salary. What are the implications?
As an experiment, I have started a discussion thread within the UK Divorce Network on LinedIn. My reasoning is that the informal and conversational style of LinkedIn may be more conducive to a broad discussion than has so far proved to be the case on this blog. If you have a professional interest in family law you may care to read or even participate in the debate. If you are not yet familiar with LinkedIn, just follow this link http://lnkd.in/YWa5GE.