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PENSION ADJUSTMENT ORDERS

Pensions are, in many instances, the most valuable matrimonial asset after the family home. Important and complex issues arise in the context of both Divorce and Judicial Separation where one or both of the parties is a member of a pension scheme. A separation Agreement does not accommodate provisions for agreeing an adjustment to a pension scheme.

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.

For the purposes of the Judicial Separation and Divorce legislation benefits are broken down into two categories: retirement benefit and contingent benefit (death-in-service).

Retirement benefits 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.

Contingent benefits 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 dependents.

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 for the dependent family.

Where the Court decides to make a pension adjustment order, it can make two types. Both require that notice is provided by the person making the application to the trustees of the relevant pension scheme. The order is also required to be served on the trustees.

An order in relation to 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.

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.

Pension adjustment orders are only applicable where the decree for the judicial separation (or foreign divorce) was granted after 1st August, 1996 or where an Irish Divorce is obtained following the operation of the legislation with effect from 27th February, 1997.

For further information, please contact Malcomson Law by calling 01 8744422 or by filling out an Online Enquiry Form. Your enquiry will be forwarded to a solicitor who specialises in Family Law and Divorce.

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