Background
We were approached directly by Mrs B from the Sharing
Pensions website as during ancillary
relief proceedings she had concerns with the calculation
of Mr B's pension rights. Mrs B was aged 45 and had been
employed in public service for most of her working life
and had been married for 22 years at the time of divorce.
Her former husband had recently retired at the age of
65 and was entitled to a full superannuation pension with
40 years of service, having worked in the public sector
for all his life. Mr B was reluctant to give up any of
his pension claiming, quite reasonably, that he needed
all of his pension for living expenses during retirement.
It was argued by Mr B's solicitor that as Mrs B was still
young and would have almost the full pension by her retirement
age that she had no need for any of Mr B's pension
rights. In view of this argument, Mrs B's solicitor and
barrister advised that pensions were off limits and should
be ignored for the purposes of the divorce settlement. Mrs B sought a second opinion and we conducted
a pension audit of all of the pension arrangements.
Pension audit
On retirement Mr B had a gross pension income from all arrangements
of £33,300 per annum and a tax
free lump sum of £88,000 from his public sector scheme.
This together with other savings gave Mr B total funds on deposit
of approximately £120,000. Mrs B had completed 21 years
in a public
service scheme and was on a salary of £79,000.
The audit showed that the capital value of Mr B's pension rights
of £557,000 exceeded that of Mrs B's pension rights by
£210,000. A significant part of the value of Mr B's pension
rights was due to the widows pension payable to a surviving
wife following his death.
Prior to divorce the relatively young Mrs B was the potential
recepient of this widows
pension. Because she was 20 years his junior, she could
not only have reasonably expected to receive this widows pension,
but also to receive it for a quarter of a centry after his death.
Of course, there is also a spouses pension attached to Mrs B's
occupational pension scheme, however, this was unlikely to have
become payable to Mr B due to the fact that Mr B was 20 years
older than Mrs B and due to mortality, she was expected to outlive
him.
Outcome
We valued the widows pension at £157,300. Prior to divorce,
only Mrs B could have benefited from this widows pension but
following divorce it was a benefit that Mr B could bestow on any wife. This £157,000
was the majority portion of the overall £210,000 difference
in value of Mr B's and Mrs B's pension rights.
In
this case offsetting was the most appropriate solution and an additional settlement
of £75,000 was secured for Mrs B to be paid in cash
from the moneys held on deposit by Mr B. Therefore, Mr
B discovered that having a much younger potential widow
can be very expensive on divorce.
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