Divorce and Pensions: An introduction to the Pension Advisory Group

“A Guide to the Treatment of Pensions on Divorce” was a report by the Pension Advisory Group published in July 2019. It has commonly been known by the family law community as PAG ever since.

PAG was recently reviewed and updated in December 2023 in “A Guide to the Treatment of Pensions on Divorce (Second Edition) 2024”, known as PAG2.

The original Pension Advisory Group were a multidisciplinary group of professionals who specialised in financial remedy proceedings and/or pensions on divorce. There were 36 members of the original Pension Advisory Group and many more consultees and respondents. These professionals included family judges, family lawyers, pension lawyers, barristers, actuaries, professors, and financial advisors, to name but a few. The make-up of PAG2 is very similar, although the organisations that responded to the PAG2 consultations have increased significantly.

PAG was supported by both the President of the Family Division and the Family Justice Council and has for many years been viewed by the family law community as a guide to good practice in the treatment of pensions in divorce. 

The Purpose of PAG

PAG was created to recognise the need for interdisciplinary discussion between lawyers, actuaries and financial advisors to achieve a better-shared understanding of divorce pensions and greater consistency in divorce cases.

It had been identified that pensions were often not adequately understood, valued, or fairly shared on divorce for many years.   

For many divorcing couples, the primary focus at the time of their divorce was on how to divide the liquid wealth between them, with pensions being largely ignored in the negotiations. As a result, many negligence claims have been brought against family lawyers for not correctly valuing or apportioning pensions between divorcing spouses. 

PAG was intended to demystify pensions, signpost legal professionals on how to deal with pensions in divorce and identify when specialist help would be needed from a Pension on Divorce Expert (PODE). 

Key Recommendations of PAG

PAG is an extensive document and runs to 161 pages. Pensions are a complex issue; as with many things, the devil is in the details.
 

The key guidance offered by PAG relates to the following:

• gathering the right information about pensions at an early stage
• highlighting the limitations of the cash equivalent values of pensions
• how to spot complicating factors involving pensions
• how to fairly share pensions in different types of cases
• how and when to identify that expert evidence is needed from a Pension on Divorce Expert and what questions should be asked of them
   

Our webinar at 1pm on 30 January 2024 will focus on the similarities and differences in the guidance contained in PAG and the new PAG2 – look out for this on our website and LinkedIn. In the meantime, our next blog on Divorce and Pensions will explore why pensions can be so valuable and why divorcing couples often ignore or overlook them.