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Scotland on Sunday published an article on Sunday 11th January entitled"Don't be divorced from reality over pensions". The article discussed pension sharing in divorce settlements, how pension sharing works and expressed the view that women are losing out in divorces as the settlement often fails to take account of the pension. This article raises interesting questions about pension sharing in Scottish divorces.

When a couple in Scotland divorce the Matrimonial Property (i.e. the assets built up during the course of the marriage minus any debts) falls to be divided between the parties. The starting point for any division is a 50/50 split although there are various circumstances that can justify an unequal division of matrimonial property.

The respective pensions of the parties that have been built during the course of a marriage constitute one aspect of matrimonial property and therefore require to be considered in any financial settlement on divorce. Pensions are often one of the most valuable matrimonial assets of the divorcing couple.

Pension sharing is possible and regularly forms part of financial settlement on divorce. Pension sharing allows for some of the value of one party's pension to be transferred to the other party on divorce.

Divorcing couples can come to an agreement in relation to the division of matrimonial property between them by way of negotiation. In such circumstances the parties will enter into a contract known as a 'Minute of Agreement' which regulates the financial settlement. If the parties fail to put such an agreement in place the Court can grant orders.

In the Scotland on Sunday article it was suggested that on divorce, women are failing to claim their share in their spouses pension and that"Divorce settlements are still putting woman at risk of financial hardship as they continue to overlook the value of their spouse's pension savings". This is not our experience at Turcan Connell. When we enter into negotiations on behalf of our clients, pensions are something we take into account and they are often a point of negotiation. Our clients' settlements often involve pension sharing agreements and in our experience pensions are not being overlooked in divorce settlements.

The article also suggests that the Court requires making an order before pension sharing can be achieved. This is somewhat misleading as pension sharing can be achieved without a specific order of the court in relation to the pensions. If the parties enter into a Minute of Agreement a pension sharing provision can form part of the agreement, and it often does. There is no specific court order required for the pension sharing agreement to be effective. However, the pension sharing arrangement only comes into effect when divorce is granted. If the parties fail to negotiate a settlement and are required to litigate matters then the court can make orders in relation to the pensions of the parties.

Pensions are one of a number of financial issues which require being resolved when a married couple separates, and if you would like any more information please contact a member of the Divorce and Family Law Team, who can advise on all aspects of family law.

This content was generated prior to Turcan Connell Asset Management Limited operating as Tcam.

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