When navigating a divorce, most couples immediately focus on the family home. However, for many, a pension is the second—or even the primary—most valuable asset in the “matrimonial pot.” A common question we hear at Sherwin O’Riordan Solicitors is: “Do I have to split my pension, even if I earned it all myself?”
The short answer is that while a split is not strictly “automatic,” the Irish courts have a legal obligation to ensure “proper provision” is made for both spouses. This often involves the division of pension rights through a Pension Adjustment Order (PAO).
Under the Family Law (Divorce) Act 1996, the court does not look for a simple 50/50 split of every item. Instead, it looks at the totality of the financial resources available. If one spouse has a significant pension and the other has none (perhaps because they stayed at home to care for children), the court will almost certainly view that pension as a joint asset earned during the partnership of marriage.
A PAO is a legally binding instruction from the court to the trustees of a pension scheme. It directs them to pay a portion of the pension benefits to a former spouse. It is important to note that a private separation agreement cannot legally bind a pension trustee; only a court order issued during a judicial separation or divorce can do this.
The court typically considers two main factors when calculating a split:
It is possible to keep your pension intact, but usually only through “off-setting.” This occurs when one spouse agrees to waive their right to a Pension Adjustment Order in exchange for a larger share of another asset, such as the family home or a lump sum of cash.
For example, if the equity in the family home is €400,000 and the pension value is €200,000, one spouse might take the full pension while the other takes a larger share of the house equity to balance the scales.
When deciding whether to grant a PAO, the court evaluates:
Pensions are notoriously difficult to value. The “Cash Equivalent Transfer Value” (CETV) provided by a pension provider may not reflect the true long-term value of the benefits, especially in defined benefit schemes. Sherwin O’Riordan often work with independent actuaries to ensure that the “family pot” is valued accurately before any settlement is reached.
Pensions are governed by the Pensions Act 1990, and the rules vary significantly between occupational schemes, PRSAs, and public sector pensions. Failing to address a pension correctly during a divorce can lead to significant financial hardship in later life.
If you are concerned about your retirement security or need to understand your entitlements to a spouse’s pension, our specialist family law team is here to help. We provide clear, expert guidance to ensure that your financial settlement is fair, robust, and provides for your future.
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