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  Introduction   Matrimonial Causes Act 1973
  Family Law Act 1996   Welfare Reform and Pensions Act
  Ancillary relief rules  
    

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Introduction
The core legislation the court must have regard for during cases of UK divorce is the Matrimonial Causes Act 1973 (MCA 73) and over time this Act has been added to in order to help courts achieve a clean break for the parties. During ancillary relief proceedings rules require three stages to resolve the matrimonial assets, being the first appointment, financial dispute resolution (FDR) and the final hearing.

During this process shown by the step-by-step guide in detail, the court can have regard to other rules to ensure the parties are on an equal footing when considering the financial matters and when expert evidence is required, the power to instruct the parties to appoint a single pensions expert.

Significant changes to pensions on divorce were introduced by the Welfare Reform and Pensions Act 1999 (WRPA 99) where pension sharing will allow the members pension rights to be divided between the parties. Further changes to the way divorce can be initiated will be introduced by the Family Law Act 1996 (FLA 96), although the government has postponed the implementation of this Act for the time being.



Matrimonial Causes Act 1973
For a couple involved in proceedings for divorce or nullity of marriage or judicial separation the relevant principles are set out in section 25 of the Matrimonial Causes Act 1973 that allows the powers of the court to resolve the matrimonial assets and financial matters including the value of retirement benefits of any pension arrangements held between the parties. The courts are directed to have regard to achieving a clean break between the parties as well as to have regard to all circumstances of the case including the following matters:

The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future including;
   
The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
   
The standard of living enjoyed by the family before the breakdown of the marriage;
   
The age of each party to the marriage and the duration of the marriage;
   
Any physical or mental disability of either of the parties to the marriage;
   
The contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;
   
The value to either of the parties to the marriage of any benefit (this can include pension arrangements) that (as a result of the divorce) the party will lose the chance of acquiring.

Where there are children of the marriage the court are concerned with the arrangements for children and will want to ensure the parties maintain their obligation and responsibilities until the children cease to be dependent. This may mean that it is not possible to achieve a clean break, as there may be a need for continued maintenance. The MCA 73 has been amended to reflect the need of the former spouse to secure members pension rights on divorce. Section 166 of the Pensions Act 1995 introduced earmarking and inserted sections 25B to 25D of the MCA 73.

The MCA 73 has been further amended by sections 19 and 21 of the Welfare Reform and Pensions Act 1999 (WRPA 99) that introduced pension sharing as well as making some improvements to earmarking. Although the Matrimonial Causes Act 1973 contains the primary pension sharing legislation the detailed working of pension sharing can be found in subordinate legislation and implemented through statutory instruments.


Welfare Reform and Pensions Act 1999
It is usual for a couple on divorce with retirement benefits to use offsetting against other matrimonial property as a resolution. Attempts to allow the former spouse part of the members pension rights were introduced in England and Wales by section 166 of the Pensions Act 1995 with earmarking and section 16 of the Family Law Act 1996 (FLA 96) with pension splitting.

Both these steps were unsatisfactory in achieving a clean break so the Welfare Reform and Pensions Act 1999 (WRPA) introduced the solution of pension sharing, receiving Royal Assent on 11 November 1999 and applying to a divorce petition and nullity of marriage from 1 December 2000. The WRPA 99 amends earmarking legislation introduced by section 166 of the Pensions Act 1995 by requiring the court to apply the earmarking order as a percentage to the retirement benefits. Part III contains the new pension sharing framework that amends existing family law, specifically section 19 amends the MCA 73 and allows the court in England and Wales to make a pension sharing order.

Section 21 amends the MCA 73 section 25B to 25D to allow a pension sharing order attachment of a specified pension arrangement or state scheme rights. Part IV deals with how pension sharing is effected and the result in relation to the pension arrangement and state earnings related pension scheme (SERPS). Finally, the WRPA 99 repealed section 16 of the FLA 96 that introduced the concept of pension splitting.

The Welfare Reform and Pensions Act 1999 has left the majority of the detailed working of pension sharing to subordinate legislation in the form of statutory instruments that exist as specific regulations. Of the more important regulations, as detailed in the step-by-step guide, is the Pension on Divorce etc (Provision of Information) Regulations 2000 that deals with the supply of information requirement from a pension arrangement as well as the valuation method of retirement benefits. In terms of valuation, the Pension Sharing (Valuation) Regulations 2000 will deal specifically with the calculation of the cash equivalent transfer value (CETV).

The Divorce etc (Pensions) Regulations 2000 are concerned primarily with earmarking and the procedures that apply to earmarking if there is subsequently a pension transfer. This has replaced the Divorce etc (Pensions) Regulations 1996 that, although repealed, still provide some useful guidance for the valuation of a members pension rights in paragraphs 14 to 16 as follows:

Paragraph 14 states that insofar as pension rights accrued up to the time when the court considers financial provision on divorce are concerned, the divorcing parties will not be permitted to use any method of valuations other than the prescribed method. It would, however, be open to them to dispute whether the prescribed method has been correctly applied.
   
Paragraph 15 states that the Divorce etc (Pensions) Regulations 1996 will not prevent the parties providing further information as to the expectation of the pension, and will not prevent the court from taking account of that information in circumstances where it deems the cash valuation provides an inappropriate or inadequate indication.
   
Paragraph 16 states that the prescribed method cannot be used for discretionary benefits not including in the CETV or pensions administrated outside England and Wales. Regulations cannot, therefore, bar other methods of valuing such pension benefits.

The Pensions on Divorce etc (Charging) Regulations 2000 deal with the pension arrangement and its ability to recover charges as a result of pension sharing and earmarking. Also, the Family Proceedings (Amendment) Rules 2000 provide a procedural code for applications related to pension sharing and earmarking.


Family Law Act 1996
Although due to be fully in force by the year 2000 the government announced in December 2000 that at least in part the Family Law Act 1996 (FLA 96) would be postponed probably for several years.

Divorce in England and Wales is currently governed by the Matrimonial Causes Act 1973 (MCA 73) where an application for divorce can only be made if the couple have been married for a year or more and the only ground for a divorce petition is that the marriage has irretrievably broken down. The action of adultery, unreasonable behaviour, desertion (after two years), two years of separation (with consent) or five years of separation (without consent) will prove this to the court.

The FLA 96 would bring in significant changes if introduced fully, where Part II of the Act will allow for no fault divorce. This means that no ground will have to be shown as to why the marriage has irretrievably broken down with the application. However, the new procedures for divorce would encourage mediation and conflict resolution for divorcing couples. The Family Law Act 1996 was passed by parliament and will be brought into force with statutory instruments by the Lord Chancellor in stages.


Ancillary relief rules
There are a number of rules that apply to ancillary relief proceedings as the step-by-step guide shows. In particular new arrangements effective from 5 June 2000 means that these proceedings will have fewer delays for settlement, lower costs and greater control by the court of the conduct and proceedings. The Family Proceedings (Amendment No.2) Rules 1999 inserts new rules into the Family Proceedings Rules 1991 introducing a three stage process involving the first appointment, financial dispute resolution (FDR) and the final hearing.

During any stage of this process the court will expect the parties to make offers to settle all or part of the matrimonial assets and for the recipient to give full consideration. If the couple cannot come to an agreement the court has the power to make a ruling after careful consideration of the facts of the case in the final hearing.

Also important for the division of a members pension rights is rule 2.51B of the Family Proceedings Rules 1991 that states that the overriding objective of the court must be to ensure that the parties are on an equal footing and deal with the case in ways which are proportionate to the amount of money involved, to the complexity of the issues and to the financial position of each party.

In all cases the court will need to be satisfied that the extra costs associated with expert evidence are justified whether this results in offsetting against other matrimonial assets, earmarking or pension sharing of the retirement benefits. Whether expert evidence is accepted during ancillary relief proceedings will depend on the courts regard for rule 2.61C of the Family Proceedings Rules 1991. This states that expert evidence will not be allowed (whether written or oral) unless permission has been given by the court and the court will only give permission if expert evidence is reasonable required and justified and in accordance with the overriding objective of rule 2.51B of the Family Proceedings Rules 1991.

Where the appointment of a pensions expert is necessary but the parties cannot agree on a single expert, the court has, under part 35 of the Civil Procedures Rules, the power to instruct that evidence be given by a single pensions expert.

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