Notable 2020 case points the way for pension splitting on divorce

The case of W v H will always hold a special place in my heart as the case that reaffirmed that family law was the area I wanted to specialise in and in particular, finances on divorce. I had the pleasure assisting with this case throughout the paralegal and trainee stages of my career representing the husband. It’s recently been dubbed the most important pensions case of 2020 as the judgment sets out the approach that the Courts and practitioners should take when distributing pensions on divorce in needs cases.

Whilst the pension assets in the case are substantial (four pensions in total including both defined contribution and defined benefit schemes), the judgment deals with questions that apply in ‘day-to-day’ cases, namely:

Should the pensions be divided to achieve equality of income or equality of capital?

If a pension has been contributed to prior to marriage, should a part of the pension be excluded from the matrimonial assets?

If a party is retaining a larger share of other assets, such as the former matrimonial home, should this be offset against any claim on pension?

It was HHJ Hess’ determination that whilst there is no ‘one size fits all’ that:

• In ‘needs’ cases, when parties are nearing retirement and there are defined benefit schemes they should look to achieve equality of income;
• In ‘needs’ cases, it may not be appropriate to exclude pre-marital contributions into a pension fund;
• Pensions should be dealt with discretely to other assets and offsetting should be avoided as a party retaining liquid capital, like cash or equity in a property, and the other retaining non-realisable assets, like pensions, can be potentially unfair.

If you would like advice on the issues raised in W v H, divorce or other family law matters please do contact the Family Law team at Harrowells.