Financial Update in the Family Court
Generally, the courts within divorce cases deal with pensions. They deal with them by way of a pension sharing order, or a pension attachment order. The other alternative is for the court to look at giving more of the other assets to a husband or wife within divorce.
However, the Pensions Ombudsman has recently dealt with a complaint by a wife, Mrs McNicholas, against Scottish Widows.
Mr McNicholas’ pension was with Scottish Widows. During negotiations between solicitors and financial advisers, Scottish Widows produced a calculation of the value of the pension as being £608,436.74. Mr and Mrs McNicholas were able to agree how to divide their assets, and the court made an order by consent that the pension would be shared. This means that money was transferred from Scottish Widows to a pension fund that Mrs McNicholas had set up with Legal & General. By the time the transfer was put into effect, the Scottish Widows pension had increased in value to £622,946. £311,473 was transferred to Legal & General, to put into effect the terms of the order.
Scottish Widows then contacted Mrs McNicholas saying that they had calculated the pension value in error, and that she should have received £213,847. They indicated that they were going to request Legal & General to return £97,626 to them.
Mrs McNicholas complained to the Pensions Ombudsman who upheld Mrs McNicholas’ complaint. They found that the injustice to Mrs McNicholas in returning the money was far greater than the injustice to Scottish Widows who had made the error in the first place. They also ordered Scottish Widows to pay £250 to Mrs McNicholas for the distress and anxiety that had been caused to her.
Pensions are a complicated area of financial provision within divorce and civil partnership dissolution. When funds are large, husbands and wives often instruct actuaries to value a pension. Sometimes funds are valued lower by the pension company themselves for all sorts of reasons – including where pension funds are in deficit, as the pension company is trying to protect the other pension pots.
Here at Ridley & Hall LLP, we can offer comprehensive advice on pensions within divoce and civil partnership dissolution.
Please contact the Family team on 01484 538421 for more information.