Pension Adjustment Orders

The Courts now require that all matters in relation to pensions and pension provision are settled by way of court order and some require the Trustees of the relevant pension scheme to indicate their acceptance of draft pension adjustment orders. Therefore, in relation to either party’s pension, court orders are now sought to direct the trustees of the pension schemes to grant the non member spouse either a percentage share of a pension benefit or a nominal or nil share represented by 0.0001%.

We now supply the complete back up service to satisfy the courts and their procedures including, cover letter to pension Trustees, legal ‘Notice to Trustees’ in quadruple, Draft Pension Orders, Pension Adjustment Orders in quadruple and declarations to the Court by way of Affidavit in regard to the serving of the above notices both on the trustees of the pension scheme and the non member spouse. All this is included for €100 extra per pension if you are a DIY DIVORCE IRELAND customer. For €700 you can have your divorce and pension orders to satisfy the courts.

If you are not one of our pre-paid customers and you require our services on pension adjustment documents we charge €150 for each pension's complete paperwork. We are aware that the legal profession are charging €1,200 + for the same service of providing a pension adjustment order provided you are obtaining the complete divorce service with them.

PENSIONS AND THE LAW

Pension schemes can be a complex area and any worthwhile understanding of them involves digesting parts of the Pensions Act 1990, the Finance Act 1972 not to mention the Divorce Act 1996. However, as such schemes are potentially very valuable it is important not to overlook them because of their complexity. We strongly recommend that any Applicant or Respondent in a divorce scenario should seek professional advice where pension rights are an in dispute.

Section 17 of the Divorce Act, 1996 covers the granting of Pension Adjustment Orders. The section contains 26 sub-sections. The granting of a Pension Adjustment Order is a loss of a benefit to one spouse and a gain of a benefit the other spouse. While it is possible to agree or consent to the granting of such a court order it can be a very touchy subject especially for the spouse losing a share of such a benefit. No couple get married expecting divorce and very few couples prepare for such an eventuality. As with the family home and maintenance, if you intend seeking a divorce by consent then pension provision should be sorted and agreed and the agreement implemented before applying for divorce. Otherwise if contested the legal profession are going to charge both spouses a heavy price for their involvement and the final decision may lie with the judge in the end. The money paid to two sets of solicitors and barristers might be the amount that could have solved the difficulty and prevented a contentious divorce.

Spouses can input clauses in their divorce application stating that they have no interest in each others pension or grant to the other spouse a percentage share in their pension.

The judiciary are obliged to consider other means of provision in lieu of pension adjustment orders to compensate for the loss of a pension right. So in lieu of a pension adjustment order the court may grant a property adjustment order or lump sum order or a total or greater share in the family home. Of course the court can grant all of the above orders depending on the circumstances.

Occupational Pension Schemes

An occupational pension scheme means any scheme, instrument or arrangement which provides or is capable of providing a benefit to an employee. There are two types, a defined contribution scheme and a defined benefit scheme. The defined contribution scheme, popular in the private sector, is a scheme where the employer and the employee pays a defined percentage of the employees pay into the employees pension account which is then invested. On the date of retirement the amount paid into the scheme can provide a lump sum and/or used to purchase a pension scheme. Most self employed persons are involved in such a scheme only that they themselves are the sole contributors.

A defined benefit scheme simply means any scheme which is not a defined contribution scheme and would be used by all State employees for instance. It would provide for a specific amount of pension and lump sum on retirement based on the number of year's worked and final salary. Under the 1972 Finance Act “final remuneration” means the average annual remuneration of the last 3 years of service. The Pensions Act defines benefits in relation to a scheme as either or both of the following:

  1. Benefit for the member of a scheme at normal pensionable age or in respect of earlier or later retirement, or on leaving the relevant employment, and
  2. Benefits for the member's widow, widower or dependents or others, on the death of a member.

Benefits

The Divorce Act breaks the types of benefits into two categories both of which can be the subject of a pension adjustment order, a “Contingent Benefit” and a “Retirement Benefit”. A contingent benefit means a benefit payable under a scheme to or for one or more of the following, the widow or the widower and any dependents of the member spouse concerned and the personal representatives of the member spouse, if the member spouse dies while in employment and before attaining any normal pensionable age provided for under the rules of the scheme. While a retirement benefit is simply any other benefit other than a contingent benefit and caters for members who reach retirement age and after retirement and on the death of the member a pension is paid to the widow or widower and any dependent member of the family. A pension adjustment order in relation to a retirement benefit can only be made in favour of the other spouse or for the benefit of a dependent member of family whereas a contingent benefit can be paid in favour of both.

An order in relation to a contingent benefit after divorce must be sought within one year of the granting of a decree of divorce. In relation to a retirement benefit an application can be made at the time of the granting of the decree of divorce or at any time thereafter during the lifetime of the member spouse and provided the applicant does not remarry. The amount of the court award or “transfer amount” shall be determined by the trustees of the scheme in accordance with relevant guidelines. The trustees, on application to them by a spouse, can pay to the applicant spouse the transfer amount or retain the applicants share in the scheme or split the pension and transfer the applicants share to a new or separate scheme.

Reckonable Service means service in employment covered by the scheme and for the period in which there was membership of the scheme. Actuarial value means the equivalent cash value of the benefit. This figure could be dependent on assumptions as to health and life expectancy and survival to normal pensionable age.

Section 54 of the Divorce Act requires trustees of schemes to provide financial and other information to spouses and of course the member of the scheme and Section 17 (25) allows the court to look for the necessary information.

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