Christopher Sharp QC reports on the new interim report and consultation launched by the Pensions Advisory Group

Christopher Sharp QC (a member of the Pensions Advisory Group) outlines the nature of the new interim report and consultation launched by the PAG on 18th April 2018.

In 2014 Cardiff University’s Nuffield Foundation funded paper ‘Pensions On Divorce: an empirical study’ provided a detailed investigation into how pensions are actually dealt with in financial remedy cases. It found that the use of pension orders was much less than the government had expected (of the 369 court files studied, 80% revealed at least one relevant pension and yet only 14% contained a pension order) and that off setting pensions against non-pension assets was the most commonly used solution. However, it also found that the economic rationality of that approach, the methodology employed and the fairness of the outcomes it produced was far from clear. An example of the unsatisfactory nature of the arguments deployed in such cases can be seen in the case of WS v WS [2015] EWHC 3941 (Fam) which also highlighted the problems where no expert evidence was available. Another example of the Court being unassisted by expert evidence was seen in the series of decisions in Goyal v Goyal. Case law is neither consistent nor very helpful. Most reported cases involve very substantial sums and as a consequence are sometimes of limited assistance in the more mainstream case where funds are more modest.

The Nuffield Foundation has now published the report of an interdisciplinary working group The Pensions Advisory Group (the PAG) which was set up to address these issues, the object being to improve the practice of dealing with pensions on divorce and to assist those divorcing couples who are not fabulously wealthy but nevertheless hold pensions of some value. The PAG is a multi-disciplinary working group jointly chaired by Francis J and HHJ Edward Hess with the support of the Family Justice Council and the President of the Family Division. Its report is entitled ‘Pensions on Divorce Interdisciplinary Working Group’.

The report can be found here: www.nuffieldfoundation.org/pensions-divorce-interdisciplinary-working-group

The intention is to promote feed back by way of wide consultation. The report is divided into two parts. First there is a section entitled “Legal Issues: draft guidance for consultation”. This seeks to set out the law as the PAG see it, to provide information to assist in understanding the issues raised in pension cases and to suggest good practice.

Second there is a section entitled “Valuation and Expert issues: Draft guidance for consultation” The purpose of this part of the report is to consider best practice in respect of the treatment of pensions in divorce proceedings, and to report on any consensus reached among a wide range of experts and lawyers as to how the valuation of pensions in divorce cases should be approached. The aim of this section of the PAG report is to enable a more standardised approach across experts and cases, ensuring better consistency in outcomes for divorcing parties and making these more predictable for individuals, lawyers, experts and judges. The report also considers the circumstances in which it might be beneficial to engage the services of Pensions on Divorce Experts (PODEs).

The report is the result of extensive work and discussion by a large group of experts from a broad range of backgrounds with the immense assistance of Hilary Woodward of Cardiff Law School. It is hoped that it will prompt wider discussion and feedback so that some authoritative guidance can be issued to assist with this difficult area of financial remedy work.

Anyone with involvement in this area of work is encouraged to respond to the consultation.