Pension division on divorce is a complicated business. The general approach might in theory be a 50/50 split. But in reality other matters – the needs of each spouse, the welfare of the children and what is contained in the overall financial settlement mean judges will frequently depart from the principle of equal pension division.
The factors the courts must take into account when deciding financial awards, including pension division, are listed in the Matrimonial Causes Act, 1973 Section 25 (see below). Here we look at the 2021 case of Baker v Finch. It illustrates how the courts apply the s25 factors in practice when deciding how to divide a pension. In particular the case demonstrates the difficulty of relying on the conduct of one spouse to reduce a pension share. In the case the wife unsuccessfully argued that her husband should receive a smaller share of the pension because his long bouts of unemployment meant he had contributed less.
Section 25 Factors: How The Divorce Courts Make Financial Awards
S25 sets out the factors the courts need to consider when deciding what financial orders to make on divorce. The factors are:
- The income and other financial resources each party has and is likely to have in the foreseeable future
- The financial needs, obligations and responsibilities each of the parties has or is likely to have in the foreseeable future
- The standard of living enjoyed by the family before the breakdown of the marriage
- The age of each party to the marriage and the duration of the marriage
- Any physical or mental disability of either of the parties to the marriage
- The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family,
- The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it
- Future financial losses arising because of divorce
In Finch v Baker case the court looked at ‘contributions’ and ‘conduct’. Could the husband’s less significant financial contribution to the marriage amount to negative conduct, reducing his financial award and pension share?
Finch v Baker 2021: Spouse’s Conduct And Pension Shares
The wife had built up a pension with a cash equivalent of £2million in the course of her career as a television executive. The husband, who was retired, had a small private pension that generated about £900 annually as well as a state pension. Other matrimonial assets were valued at around £2million. At the first hearing in the District Court, the judge decided each party should get more or less equal pension income. He therefore granted the husband a 48.6% share of the pension generated by the wife’s employment. The wife appealed this decision and the husband’s share was reduced to 34%.
From our point of view what’s interesting is that one of the wife’s (several) grounds of appeal was that (in her view) it was wrong for the lower court to find that the husband’s contribution to the marriage was ‘modest’. She contended that in fact his contribution had been ‘significantly negative’. She pointed to his long periods of unemployment throughout the marriage, arguing that these should be taken into account when deciding any financial award, including the pension division.
Conduct v Contribution
The Court of Appeal was pretty forthright in its view of the wife’s argument that contributing less financially to a marriage could amount to bad conduct under s25 – describing it as ‘hopeless’. She was, the court decided, attempting to pursue a conduct argument by the backdoor by trying to frame it as a contribution argument.
In summary the wife tried to argue that the husband’s scant contribution to the welfare of the family could be used as evidence of negative conduct that should have the effect of reducing his share in her pension. She failed. The court’s priority in divorce cases is always to achieve fairness. Regarding the s25 factors the financial needs, obligations and responsibilities of the parties will always come first.
To discuss the financial aspects of your divorce settlement, including pension division please call Brookman Solicitors on 44 (0) 20 7430 8470 or contact us online. We are happy to provide a free, initial consultation.