To love, honour and pay up

Imminent changes in pension rules have sparked a dramatic rise in the number of divorces in the UK over the past few months. But are the newly-single and those desperate to be so, missing the point?

Almost half the marriages in Britain end in divorce, but the last few months have produced a dramatic jump in numbers. This sudden spate reflects changes in rules on splitting pensions at divorce, which take effect from 1 December. "Move now while old rules last," is the motto for most of the men - and it is men - who are making the break.

Almost half the marriages in Britain end in divorce, but the last few months have produced a dramatic jump in numbers. This sudden spate reflects changes in rules on splitting pensions at divorce, which take effect from 1 December. "Move now while old rules last," is the motto for most of the men - and it is men - who are making the break.

Pensions are often men's largest asset, particularly when they are middle aged and have had a career in the Civil Service or stayed with one employer all their lives.

At the moment, courts - or lawyers negotiating divorce settlements - can deal with pensions in two ways. Option one is to add them as an ingredient to a vast melting pot of other assets, including the house, investments and so on. Effectively courts can do a trade off, awarding one partner a larger part of the other assets than they would otherwise receive, in return for giving up any rights to a share in the other's pension.

Two years ago the government introduced an alternative - "earmarking". This allows wives (or indeed husbands if traditional roles are reversed) to receive a share of their ex-partner's pension, which is earmarked for them in advance. That means they will get a proportion of the pension when he retires, fixed at the time of divorce.

The idea may be ingenious, but has been a resounding flop. Its big disadvantage is that it leaves the poorer partner with nothing if they remarry or their ex-husband dies before retirement. So almost no one has taken it up. There are between 140,000 and 150,000 divorces a year. But lawyers have negotiated fewer than 1,000 settlements which earmark pensions since the idea was introduced four years ago.

That explains why the government brought in the latest changes, which take effect on 1 December. This time the law will allow couples to split the pension at divorce. Courts can order, or solicitors arrange, that the wife should actually have up to half her husband's pension transferred to her. It can appear in her name in the former husband's pension funds, or she can transfer it to a pension of her own.

The money will not be available there and then, for people will have to wait until their former partner retires. But they will not lose because they have remarried or their husband dies before retirement age. Indeed, wives can negotiate to receive some of the life insurance that most pension schemes provide if someone dies while still working for the company concerned.

Vanessa Lloyd Platt is a leading divorce lawyer, although ironically she also acts as a counsellor and her book The Secret of Relationship Success, on how couples can keep together, is to appear at Christmas. She is convinced that many husbands who have rushed into divorce to beat the pensions changes have actually missed the point. "The new rules don't replace the pooling system and provisions for earmarking. In fact, they just provide lawyers and courts with another option. They can use the existing arrangements as they can now," she says.

"The women who are likely to gain from splitting are late middle aged and have been married for 25 years or more with ex-husbands coming up to retirement. In fact, they are far less likely to split than younger people. Couples are most likely to get divorced after two years, seven years and ten years - so this change will have much less impact than people expect."

Robin Ellison, a partner at Evershed, a leading London solicitors, agrees, claiming the new arrangement will only make a real difference where one partner or the other is earning over £35,000 a year.

Pensions are only one asset, and the younger people are, the smaller and less significant pensions will be in any settlement. The biggest issues will be provision for children living at home, how long the marriage has lasted and the overall contribution - not just financial - they have made to it.

Normally wives receive custody of the children and their housing needs come first. They will live in the family house, though if it is particularly large the courts can give part of its value to the ex-husband. But often he can only "cash in" his share when the place is sold, after the children have grown up and moved away.

That is the longer-term option. If the property's value has risen sharply, and the mortgage is low in relation to its potential price, courts can award one partner perhaps 10 per cent or 30 per cent of its value payable now, even if the children are still there. Wives looking after them do not have to sell the place to provide the funds for their ex-husband's flat. They can remortgage the property, taking borrowing levels up again, and pay over the cash to their ex-husbands.

"If there are no children, courts will often try to put people back into the position they were in before the marriage started," says Ms Lloyd Platt. "People often assume that the house or flat will be sold, and they will each receive half the value. In fact, courts may split down the proceeds so that if one partner paid most of the deposit and the bills, he or she will receive most of the value of the house."

So much for the lump sum settlement. But maintenance, or regular payments, will normally come into the picture if children living at home are involved, particularly if they are young and the mother has given up a job to look after them.

The couple can always agree a figure themselves as part of the divorce settlement. But if there are any disagreements, the government's Child Support Agency will make a decision on how much income should move from husband to wife, taking into account their respective incomes and the ages of the children.

Once the former partners have agreed to split the capital and property, or have had a split imposed on them by the courts, that is that. Rules for maintenance are very different. Either side can appeal for a variation order if circumstances change. The former husband may have a salary increase or bonuses, his ex-wife may go back to work, so that she does not need the same level of maintenance, or indeed fall ill so that she needs more.

But any appeal of that kind needs hard evidence. People going for variation orders may suspect their ex-partner has come into money, or received a bonus. The courts will not allow them to go on a fishing expedition to discover whether they can pay more or can afford to receive less. They need to know the facts before they start litigating.

As divorce has become almost standard, so the rules for making the final break have become easier. But details can vary enormously, depending on how the couple are placed, whether children are involved and how much they have each contributed, not just financially, to the marriage itself.