In a judgement delivered in private in the Family Court sitting at Swindon, amongst other points of note, His Honour Judge Hess considered in detail the opinions within the 2019 Pension Advisory Group (PAG) Report, to assist with the discretionary exercise regarding pension sharing and various issues including the questions of capital or income sharing; and pre-marriage accrual. It is the first reported financial remedy case to make specific reference to the PAG report since its publication in July 2019.
The case concerned a Wife (W) of 50 and a Husband (H) of 48. The Husband had been previously married and divorced and had two children from his first marriage. The Wife was previously unmarried. They met in 1998, started cohabiting in 1999 and were married in 2005. There were three children of the marriage aged 10, 16 and 18.
HHJ Hess highlighted three relevant issues concerning the pension assets:
In the first reported case to feature specific reference to: “A Guide to the Treatment of Pensions on Divorce: The Pension Advisory Group Report” (July 2019) (also known as the ‘PAG report’) the judge drew heavily on the opinions within, stating that it should “be treated as being prima facie persuasive in the areas it has analysed” (59). He went through each relevant issue in turn;
The judge highlighted that there is no ‘one size fits all’ approach to the question. He drew upon page 11 of the PAG report which says as follows:
“In a needs-based case, in particular where there is a significant Defined Benefit pension involved, for the parties or court seeking to identify a fair outcome the appropriate analysis will often be to divide the pensions separately from the other assets, based on an equalisation of incomes approach, such approach often requiring expert evidence from a PODE.”
In view of the circumstances of the ages of W and H, the size and make-up of the pension funds and the limited other realisable assets, the Judge was of the opinion that a pension sharing order which resulted in an equal division of income was required.
At paragraph 61(iv) HHJ Hess drew on the decision in M v M  EWFC B63 together with page 22 of the PAG report and said:
“Where the pensions concerned represent the sole or main mechanism for meeting the post-retirement income needs of both parties, and where the income produced by the pension funds after division falls short of producing a surplus over needs, then it is difficult to see that excluding any portion of the pension has justification.”
Page 35 of the PAG report recommends avoiding offsetting pension assets and instead dealing with them discretely to equalise by pension sharing orders.
In summary, the Judge decided that a pension sharing order should be made which provided for equality of pension income, taking into account all of the pension assets. He used the remainder of the judgement to set out the calculations for the Order, with detailed reference to the report by the PODE instructed in the case.
The details of this case are unremarkable and akin to the type of divorce a family law practitioner will see on a day to day basis. A long marriage; three children of the family at differing educational stages; a spouse who has given up career prospects to care for the children, creating a stark gap in respective financial needs.
The theories behind the judgement of HHJ Hess are also unremarkable; the relevant authorities being used to provide a reasonable, sensible and seemingly fair result for both parties.
It is the willingness to use and specific mentions made to the PAG report which strike as interesting in this case. HHJ described the report as being “prima facie persuasive” and it is inevitable that we will see judgements making specific reference to its opinions in future financial remedy cases concerning pension assets.
If you would like to discuss pensions and need some expert legal advice or simply require more detail please contact Andrew Smith or Lilly Grant in our York office, Chris Burns or Sophie Arrowsmith in our Leeds office or Richard Buckley in our Sheffield office.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.