Most people are aware that when identifying the assets of a marriage for the purposes of a separation or divorce, pension rights whether occupational or private are taken into account.
Matrimonial property includes pension rights accrued during the course of the marriage. A cash equivalent transfer value at the date of separation is obtained from the Pension Administrator. This gives us the value of the pension, but what if your pension started long before your marriage or what if you were not an active member of the pension scheme during the course of the marriage?
It may not have been headline news but family lawyers in Scotland were eagerly awaiting the outcome of a recent Appeal case to help clarify how we calculate the value of a client’s pension rights.
The Divorce etc., Pensions (Scotland) Regulations 2000 contained guidelines on how solicitors were to approach such a valuation. An apportionment is carried out to determine the value that accrued during the course of the marriage.
If you have accrued pension rights prior to the marriage account is taken of that. However, the formula set out in the Regulations to calculate the apportionment was open to interpretation. What constitutes “membership” for example. The court decided that the period of membership of a pension should be active membership of a pension scheme.
It can be complicated and unfortunately even the three judges in the appeal did not agree unanimously and the case is likely to now be further appealed to the Supreme Court.
Our Family Law team are experienced in dealing with pension valuations and we would be happy to assist with any queries.