Furthermore, she would have control over access to these rights. Unlike with earmarking, if she did remarry these pension rights would be retained. A clean break from Ellen would be achieved, which is likely to appeal to both parties.
Under this option, it is likely that other matrimonial assets would need to be shared, which could be problematic.
If the pension rights being shared were under an unfunded public sector scheme, the pension credit would be established under the scheme, meaning that Portia would become a scheme member.
The benefits offered under the scheme in respect of the pension credit may not provide the flexibility Portia requires.
From Ellen’s viewpoint, this option could have negative pension tax implications. If she held primary protection or one of the forms of individual protection, the pension debit could potentially result in a reduction in the lifetime allowance she has available.
The reduction in her pension savings, caused by the pension debit, may require a significant increase in future pension funding to make up any shortfall, and could result in annual allowance issues.
Going through a divorce is likely to be stressful and expensive.
Therefore, having legal representation that fully understands the ways of dealing with pensions on divorce and how they interact with their client’s circumstances is essential in ensuring a positive outcome for the client at a cost that provides value for money.
Where the legal representative’s pensions knowledge is lacking, then it is likely that they will turn to their adviser connections for assistance.
It is here that the adviser can add value, as well as potentially inheriting new clients.
Neil MacGillivray is head of technical support for James Hay
