Firstly apologies that this bulletin is rather longer than normal, but please bear with me.
Secondly I would be very grateful to receive replies to the queries I raise.
A recent report published by Cardiff University and the Nuffield Foundation is the first detailed study into pension sharing since it’s introduction in 2000.
The research is based on 369 randomly selected divorce files from 3 courts, one to one interviews with 32 family solicitors and meetings with 7 district judges.
Some of the main findings of the report can be summarised as follows
- Pension sharing orders were only issued in 17% of cases where either or both parties had any pensions or 14% of divorces overall
- Most pension sharing orders are provided to those in later ages, marriages of 20 years+ and pension assets over £100,000
- The use of pension sharing orders is significantly increased when one or both of the parties are legally represented
- No pension attachments were evident at all
- £50,000 appears to be the level of pensions before they are likely to be factored in to a settlement
- No evidence of Form P on any court files
- Only 6 cases had CEVs of the additional state pension
- Of 130 cases assessed 31% had adequate disclosure, 40% were inadequate and 29% were unclear. An example of this includes a pension in payment that was marked as N/A when the estimated value was between £30,000 and £60,000.
- The average cost of a pensions report is £1,000 + VAT.
- Pension reports, whilst on the whole assisted with creating a settlement, were still hard to understand
- Fairness of the settlement quantum – fair in a third of cases, unfair in 15% and unclear in nearly half of cases.
Factors against having a pension sharing order and possible solutions
Lack of understanding and the complexity of pensions – it would appear from the report that this view is widely held not only by the clients but in some quarters by the family lawyer as well. Whilst I discuss later the possibility of preparing a guide for clients, perhaps this issue can also be addressed by an educational YouTube video, telephone conferences or online meetings – your views would be greatly appreciated.
The costs of implementation. Whilst the report calls for the regulation of implementation costs, personally I think as a whole it works reasonably well in line with the NAPF guidance with in fact many schemes not charging at all. Key could be understanding whether the scheme will allow for implementation charges to be deducted from the transfer payment removing the concern of affordability.
Whilst the report shows that the vast majority of cases are dealt with by offsetting there would appear to be some issues as to value placed on the pension assets.
Improving the situation
I am looking to take the findings of this important report and put into place over the coming months a programme to address some of the issues raised for both you, as a family lawyer, and your clients.
What I would like to consider are the areas of the report that we currently look to assist you and your clients with and to look at how we can improve the situation namely in:-
- Initial discussions with clients to assist with pension awareness
- Gathering pension information
- Preparing expert pension reports and presenting them to clients
- Implementation and investment of pension sharing orders
- Training and development of family lawyers and barristers on pension issues either in house or at public events
The report suggests that a guide for the clients to understand pensions would be beneficial.
Could I please ask for comments on the following questions
- Would such a guide be beneficial?
- If so, how many are you likely to use on an annual basis?
- How many pages would you expect the guide to be? (i.e. How in depth the guide would be)
- Do you feel that clients would pay for such a guide or will it need to be funded elsewhere
- Would any solicitor be prepared to assist in preparing such a document?
- Would the use of technology such as Go To Meeting / Webinar help facilitate initial meetings to discuss / explain pension issues or to present / review pension reports?
- What other thoughts might you have?
The report shows that there is a need for further training for family lawyers to develop and maintain pensions knowledge. This is particularly timely as I am currently developing a CPD accredited programme of webinars (and possibly seminars) and I would welcome comments on any further areas that may be felt beneficial. If you would like more information on the proposed programme then please let me know and I will send you further information.