T v T: Change in value of pension does not justify variation of pension sharing order
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Before I say any more I should be entirely honest: I had not realised that there was a power to vary a pension sharing order. I had thought that, as it is an order of a capital nature, it could not be varied. But I was wrong. A pension sharing order can be varied, albeit only in very limited circumstances: the application to vary must have been made before the pension sharing order took effect, and before Decree Absolute has been pronounced: see Matrimonial Causes Act 1973, section 31(4A)(a).
I learned this little gem whilst reading the report of T v T (variation of a pension sharing order and underfunded schemes). The observant reader may think that the variation power may be rarely used. After all, surely, in the vast majority of case application for the decree absolute is made very shortly after the making of the order?
Well, yes, but remarkably in T v T the order was made way back in 2015, the variation application was made by the husband on the 21st of November 2017, decree absolute was pronounced on the 22nd December 2017, and the pension sharing order was still not implemented when the husband's application was heard by His Honour Judge Edward Hess this month (the husband's variation application of course prevented the order from being implemented).
[As an aside, and as Judge Hess pointed out, had the husband died at any time between the 22nd December 2017 and the date of the hearing, there would have been no widow’s benefits under the husband’s pension scheme, and no effective pension sharing order. The wife could therefore have lost out substantially, but happily (for him, and possibly the wife's solicitor's insurance premiums) the husband is still breathing.]
So to the judgment. As usual, I'm going to be very sparing here, but financial remedies practitioners should read the judgment in full, as it covers important matters relating to pension sharing that I will not be summarising here.
The crux if the husband's application was that the value of his pension had increased substantially since the order, with the result that the 40% share that the wife had been awarded would be worth substantially more. The value used by the court was £826,125, whereas the most up to date figure is £2,471,833.
Cutting to the chase, Judge Hess found that the husband’s application was hopeless from the outset. He said that there were "three powerful reasons" why the change in value of the husband's pension did not justify any variation in the percentage figure awarded to the wife (where not within quotation marks, I precis Hess J's words):
1. By suggesting that the wife should have her entitlements fixed now at the cash sum contemplated in 2015, even if the cash sum is given some inflationary growth, the husband is ignoring the fact that that cash sum will, as a result of the very changes in market conditions and gilt yields which have driven the increased valuation, purchase commensurately lower income benefits than they would have done had the pension credit been transferred in 2016.
2. In so far as having a higher valuation is a windfall benefit (and, for the reasons explained above, this can be illusory if one views a pension as an income producing asset) the husband has had an even greater windfall in that his residual 60% of the fund has gone up in value by even more (1.5 times) than the wife’s 40% portion of the fund.
3. "It is predominantly the husband’s actions which have prevented the pension sharing order taking effect for more than six years. By doing this he has left open the possibility of moving target syndrome more than in most cases and if he feels he has lost out by it then he is very substantially the author of his own misfortune."
Accordingly, the husband's application was dismissed.