Pensions

Pensions are often a significant marital asset, especially since the bursting of the property bubble. There are a number of different categories of pension.

• State Pension. The old age pension, as it is commonly known, is payable on both a contributory and non-contributory basis. The contributory state pension is payable regardless of your means provided you have paid a sufficient amount of PRSI throughout your working life. The non-contributory state pension is means tested and only given to those that qualify pursuant to the means testing criteria. For more information on this go to www.welfare.ie.
• Private Pensions. Private pensions are those that are either built up through contributions or through entitlement in employment. Therefore in the private sector workers generally build up their pension by making contributions to it over time out of their income. In the public sector the pensions were, until recently, linked mainly to length of service and final salary.

Under current legislation the Courts have the power to split pensions between spouses, for example where one party has a large pension and the other party has none. The effect of the Order is to divide whatever pension is there at the time of separation or divorce into whatever percentages the court deems fair. It is important to note that pensions cannot be divided by means of a Deed of Separation as the Trustees of a pension scheme cannot be bound by the terms of a Deed of Separation. If a pension is to be split it must be done by means of a pension adjustment order granted by a Court on the granting of a Judicial Separation or Divorce. The other important thing to note is that many pensions have a spousal element, ie a pension payable to a spouse in the event of the death of the pension scheme member and these are also important benefits to be dealt with in a separation.

For clients with complex pension arrangements we often recommend instructing a specialist family law Actuary to assist in advising on the value of the pension and the most efficient way to deal with splitting it.  For more information on pensions the Pensions Board have published a guide to pensions and family law which can be found on www.pensionsboard.ie.