Pension rights (separation and divorce)

 

Pension rights may be a significant asset in judicial separation or divorce proceedings. It is important that both people involved understand the value of pension benefits.

 

Disclosure of property and income

If separation/divorce proceedings have been issued, each spouse is required to give particulars of his/her property and income to the other spouse. This would include rights under a pension scheme. The only pension rights which may be taken into account on divorce or separation are those which accumulated during the marriage.

 

Current legislation gives the Courts power to direct the trustees of a pension scheme to pay benefits in accordance with a Court order.

 

What are pension benefits?

Anything earned under any type of scheme or arrangement. This would include benefits arising from membership of a company pension scheme or a personal pension policy.

 

Generally, there are two main types of pension schemes:

 

Defined benefit: retirement benefits are based on an individual's final pay and service with the employer. An employee can calculate the value of pension payment.

 

Defined contribution: an amount is saved on a monthly/annual basis and the benefit payable will be dependent on the final fund value.

 

Benefits payable under the Social Welfare Acts and disability benefits arising under an insured income continuance policy are not pension benefits in the context of the legislation.

 

For the purposes of the legislation, pension benefits must fall under one or other of the following two headings:

 

Retirement Benefits

These are payable to the member of the pension scheme on retirement or when the pension is payable. The benefits include retirement pensions; retirement lump sums or gratuities and other benefits connected with the pension scheme.

 

The definition of retirement benefits includes benefits arising from a previous employment which have not yet commenced, retirement pensions which are in course of payment and benefits arising from a current employment which will commence from a future date.

 

Contingent Benefits (death-in-service)

This refers to benefits which are payable under the rules of the pension scheme in the event of the death of the member during the period of employment (or self employment) to which the scheme relates. The definition includes lump sum benefits and pensions payable to dependants.

 

How the Courts deal with pension rights

 

In Proportion

A pension adjustment order requires the trustees of that scheme to pay a proportion of the pension benefits to the other spouse or for the benefit of a dependent member of the family.

 

The Court may take account of pension benefits by making an adjustment to the allocation of non-pension matrimonial properties. The Court can also decide that adequate financial protection can be made for the dependent spouse and children by requiring the other spouse to set up a suitable life assurance policy - rather than making a pension adjustment.

 

Only the spouse or someone representing the children can apply for such a Court order. The Court will take into account whether sufficient provision has already been made.

 

Pension Adjustment Order

Where the Court decides to make a pension adjustment order, it can make two types. Both require that the order is served on the Trustees of the relevant pension scheme(s).

 

Pension adjustment order - retirement benefits

An order in relation retirements may be made in favour of either the dependent spouse or a person (e.g. a grandparent) for the benefit of a dependent child.

 

Pension adjustment order - contingent benefits

An order in relation to contingent benefits may be made in favour of the dependent spouse and/or a person for the benefit of a dependent child.