Pension Attachment on Divorce
Pension Attachment is the mechanism by which an ex-spouse can receive a portion of the member’s pension or lump sum benefits once these come into payment.
Pension Attachment was introduced as one of the main elements of the Pensions Act 1995 and applies to all divorces where the petition is made after 1 July 1996. Pension attachment was extended to dissolution of civil partnerships for same sex couples following the introduction of the Civil Partnership Act 2004 which took effect from 5 December 2005.
The main features of pension attachment orders are:
- Pension rights remain property of the original scheme member
- Diversion of benefit(s) to their ex-spouse takes place only from the time that the benefit(s) to the scheme member come into payment
- Can attach:
- Member’s pension
- Retirement Lump Sum
- Death in Service Lump Sum
- Can’t attach spouse’s pension
- An attachment order must be expressed as a % age of the benefits payable
- An attachment order takes into account pension benefits accrued after the date of divorce.
As far as an attachment order to the member’s pension is concerned, this can be thought of as a “secured periodic payments order” where the pension scheme acts as the third party to ensure that payments to the ex-spouse are made directly to them from the member’s pension rather than requiring the member giving an undertaking to pass a portion of payments to the ex-spouse once these have been received. As far as an attachment to a retirement lump sum is concerned, this may be thought of as a secured lump sum order where the pension scheme acts as the third party to ensure that a portion of the member’s retirement lump sum is paid directly to the ex spouse from the member’s lump sum rather than requiring the member to pass this to them directly.Where the pension scheme acts as a third party it provides much greater security to the wife as, once the order has been made, there is no worry for the ex-wife as to whether the husband will honour any undertaking made. Even in the event that the scheme member has left the country and was out of the reach of the UK Courts, the ex-spouse will receive any payments due to them directly from the pension scheme.