Section 25 (1) (g) of the Matrimonial Causes Act 1973
(g) …the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring;...
In the financial proceedings application, after the home the value of any pension fund may be the most substantial matrimonial asset. Although this sub-section is expressed to apply to any asset and not just to pension funds in practice the vast majority of cases will be concerned with pensions. Naturally, in the case of a short marriage where both parties are at the beginning of their working life this sub-section will normally have little significance. But as the length of the marriage increases along with the amount of the parties’ incomes which has been devoted to building up their pension funds this consideration will become ever more important for their pensions and divorce.
Take, for instance, the case of a couple who have been married for thirty or so years and who are aged in their late fifties. The husband might have worked all his life while the wife remained at home and looked after the children. During the course of his working life the husband (and his employer) might have contributed very substantial sums into a pension fund which, in the ordinary course of events, would benefit the family when the husband retired from work and his widow in the event that the husband pre-deceased his wife. This is a very common situation and the amounts involved might be very large.
Whether the wife would benefit from her former husband’s pension entitlement after their divorce very much depends upon the wording of the pension deed but in the normal case an ex-wife would not benefit if she was not a “dependant” of her ex-husband at the date of his death. Quite apart from anything else, husband might re-marry and the beneficiary under his pension fund might then very well be his new wife rather than the ex-wife.
Bearing in mind that the pension fund will have been built up from the husband’s income during the course of the marriage the ex-wife will, to some extent, have “paid” for this pension because funds which could have gone into other things were diverted into the husband’s pension. If the ex-wife is without pension arrangements of her own (or has insufficient pension provision) it will now be impossible for her to make that provision because of her age. She will, therefore, have to be compensated in some way for the loss of this future pension benefit.
Very often the way this was done was to award the wife a greater share of the other matrimonial assets in order to compensate her for the loss of pension benefits under her ex-husband’s pension plan but more recently legislation has come into force which allows for more sophisticated ways of dealing with divorce and pensions, including pension sharing. Basically, the way it will be dealt with will very much depend on how husband and wife prefer to tackle the problem but the principle of the matter is clear: if there is a loss of benefit in this way the courts will take it into account in the financial orders which they make.
This principle would also apply to other financial losses which might flow from the divorce. For instance, one of the parties might cease to be a beneficiary under a trust fund as a result of the marriage coming to an end. Again this is something which the courts will take into account.
Section 25 of the Matrimonial Causes Act 1973 essentially reads:-
”It shall be the duty of the court in deciding whether to exercise its powers ….. to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.
25 (1) It shall be the duty of the court in deciding whether to exercise its powers …. to have regard to all the circumstances of the case including the following matters, that is to say –
(g) …the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring;…”