A WOMAN has won a landmark appeal to be granted a greater share in her husband's pension after divorce.
Annie McDonald won a Supreme Court appeal two years after two earlier rulings that she was only entitled to a fraction of her ex-husband's pension.
Mrs McDonald married miner Thomas McDonald in 1985 but seven months later he was forced to retire early - aged 32 - following an accident at work and received a full British Coal pension.
Analysis: Splitting the pension pot during divorce
The couple separated seven years ago after 25 years of marriage and sold their family home, splitting the proceeds evenly, however a dispute arose over the pension pot.
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Mrs McDonald claimed that although he only paid into the pension for a few months after they wed she was entitled to a share as it is "matrimonial property".
Mr McDonald argued only the value of the pension rights related to the period he paid in as an “active member” of the scheme should be counted.
The ruling now means instead of £10,000 she will receive £130,000.
Analysis: Splitting the pension pot during divorce
The decision has implications for couples who are separating and how they share and calculate their assets.
Family law specialist Cath Karlin said that "for anyone in the process of separating, the decision could have a huge impact on how assets should be divided".
The legal battle escalated when a sheriff ruled in Mr McDonald's favour, and Mrs McDonald appealed to the Court of Session.
Analysis: Splitting the pension pot during divorce
Lord Malcolm and Sheriff Principal Abercrombie QC agreed with Mr McDonald at that time but Lady Smith disagreed, an outcome that was said to have left the door open for the Supreme Court appeal.
Now Lord Hodge, on behalf of Lady Hale, Lord Wilson, Lord Carnwath and Lord Hughes, said in the judgement that earlier interpretations of the definition of pension scheme membership had involved "adding words" to regulations "which are not there".
He said: "It is important in that regard to recall that the 1985 Act there is included in matrimonial property all property acquired before the marriage for use as a family home or as furniture or plenishings for such a home.
Analysis: Splitting the pension pot during divorce
"Thus even within the Act there is no unqualified principle that property must have been acquired during the marriage and before the relevant date.
"Indeed, the asset which will often be the most valuable asset within the matrimonial property is excluded from the section regime.
"Further, assets acquired during the marriage by way of gift or inheritance from third parties are excluded from the matrimonial property."
He continued: "In any event, as I have said, confining 'the period of the membership' to the period when contributions were made and apportioning the value of the rights or interests in the benefits by reference to time, may often create an apportionment of the rights or interests in benefits in personal pension schemes which bears no relationship to the relative value of the rights acquired before and during the marriage.
Analysis: Splitting the pension pot during divorce
"I am therefore persuaded that 'period of the membership' refers to the period of the person’s membership of the pension arrangement, whether or not contributions are being made to that arrangement in that period.
"That does not mean, of course, that the value of an interest in a pension arrangement must be shared equally.
"I would allow the appeal and remit the case to the sheriff at Edinburgh to proceed accordingly."
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