Pensions after Standish: HHJ Hess Reaffirms Fairness Over Formula in BS v HC [2026] EWFC 20 (B)

BS v HC provides a helpful illustration of the approach to be taken to matrimonialisation where pensions form a key part of the asset base. This case also sets out and reaffirms the rightfully exacting standard required for an add-back argument to succeed.

Background

The husband (“H”) was aged 63 and had been previously married with four children. That marriage ended in 2005 and a final order was granted in 2006. H had ongoing obligations to his first wife until 2019 when further capital provision was made.

The wife (“W”) was aged 60 and unlike H had not been previously married. She had no children. H and W met in 2008 and started cohabiting in April 2009, marrying in August 2009. From April 2009 until early 2014 the parties lived in a flat in East London which was owned by W’s father, having previously been W’s home prior to the parties meeting. No rent was charged. From 2014 to 2023 they lived together in Gloucestershire and then in Devon from 2023 to 2024.

The wife received a gift in July 2013 from her father amounting to £1,500,000 which was used to purchase a property in Gloucestershire in the parties’ joint names for £838,000. H worked in a family-owned business until his retirement in 2021. From then on, he provided consultancy services on a limited basis. W had previously worked as an interior designer, however she had not done so for approximately 13 years. At the time of proceedings, W lived in the family home in Bristol.

The parties separated on 31 March 2024 (H’s case) or 19 May 2024 (W’s case). The marriage was one of medium length being 15 years. W issued a divorce application on 24 June 2024, with a Conditional Order being made on 15 January 2025.

Add-back

H had made gifts to his adult children amounting to £102,330 between May 2024 and December 2025. W sought to receive an add-back of that value. The argument put forward on behalf of W was that these funds ought to be added back into H’s column of the asset schedule as “it is unfair if one of them makes substantial non-consensual gifts prior to a division of assets because the mathematical effect is that the non-consenting party is paying for half of the gift” ([14]).

Comparatively, H argued that the payments were part of a habitual wish to help his children and highlighted a high degree of reciprocal spending on the part of W in the last year or so. W had acknowledged that high level of spending in her oral evidence, justifying having spent that amount due to the trauma and distress of the instant proceedings.

HHJ Hess reiterated that “the legal test for add-backs is a high one – only dissipations which are wanton or reckless and where the spending was deliberately targeted towards diminishing the share of the party will justify such an add-back” ([15]). It was made clear that it is wholly correct for courts to analyse with sufficient scrutiny claims that any financial remedies litigant has engaged in manipulative spending to diminish the sharing claim. However, considering the matter in the round, although some of the payments by H were deemed to have come “close to the line”, the spending of W was to be “properly treated as neutralising the position” ([16]). Therefore, this was not a suitable case for an add-back.

Pensions

H had pensions of substantial value (£3,063,941) whilst W had pensions of limited value (£35,363). H joined a defined benefit salary scheme for his employers on 1^st February 1988. H’s rights under the scheme were accrued by reference to a multiplier which was subject to a maximum cap of 20 years of service. In 2006, H’s first wife received a 50% pension sharing order, taking an external transfer of £130,000.

During proceedings a PODE report had been produced by Mr Nobbs who set out that at the point at which H and W began cohabiting in April 2009, the pension would have had a cash equivalent (“CE”) value of around £180,000. By 2008, and therefore before the parties met, that cap had been reached. The scheme closed in 2012 meaning that no further rights accrued after that date.

By March 2021, the full CE value of H’s rights was £2,407,990 subject to an 8% reduction on transfer (£2,215,351). One of the reasons for the significant uplift was because substantial contributions had been made to the scheme from H’s company to address previous underfunding, with between £1,000,000 – £2,000,000 being contributed yearly. The scheme also benefited from macro-economic financial conditions and changes in the actuarial methodology for pension valuation. In March 2021, H transferred out of the scheme to a Quilter Self-Invested Personal Pension with a CE of £2,215,351.

The central dispute revolved around whether or not Hs pensions could be considered as matrimonial property – therefore being subject to the sharing principle – or non-matrimonial property and hence only to be drawn upon on a needs basis.

Approach to Apportionment

A number of methodologies can be adopted when looking at the issue of apportionment, with the Pensions Advisory Group’s most recent report (“PAG2”) setting out three main methodologies: (i) ‘the deferred pension methods’, (ii) ‘the CE method’, and ‘the Straight-Lined method’.

In producing the PODE report in the instant case, Mr Nobbs had adapted the methodologies, instead opting for (i) ‘the service approach’ (similar to ‘the deferred pension methods’); (ii) ‘the funding approach’; and (iii) ‘the CE approach’.

For these purposes, W argued that HHJ Hess ought to adopt the CE approach given that that vast majority of the CE value of the pension had accrued during the period of the marriage. It was put on behalf of W that this amounted to approximately 91.5% of the CE value. This was argued on the basis that during the period in which substantial payments were being made by H’s company, this dampened other payments which H may otherwise have received from the company. Further, H was the CEO during this period and would have therefore had sway on this. This was suggested as being “a classic example of marital endeavour” ([28]).

Alternatively, H argued that the appropriate way to look at apportionment was ‘the service approach’. Namely, looking at when the service was performed by H leading to the accrual in pension rights. On H’s case, only 14.4% of the pension accrued during the marriage. Or, in the alternative, at most 38.1% owing to company contributions whilst the remaining growth could be attributed to actuarial matters not owing to the marital endeavour.

HHJ Hess reiterated that the Court’s approach however is not to “identify a clear mathematical demarcation lie, where (as here) there is a complicated continuum” ([30]). His Honour went on to make clear that “[a]lthough the mathematical analysis is a helpful and important ingredient, the search for fairness requires a broader weighing of the competing   arguments. In some cases one of the formulaic approaches might seem fairer, in other cases a different formulaic approach might seem fairer and in other cases a blend of approaches might be fairest.” (Ibid). Looking at all the factors holistically, HHJ Hess determined that 55% of H’s pensions had been accrued during the marriage.

The extent / applicability of matrimonialisation

HHJ Hess began by referring to the words of the Supreme Court in Standish v Standish [2025] UKSC 26 on the issue of matrimonial property. By way of reminder, the Supreme Court set out the following:

“Non-matrimonial property is typically pre-marital property brought into the marriage by one of the parties or property acquired by one of the parties by external inheritance or gift. In contrast, matrimonial property is property that comprises the fruits of the marriage partnership or reflects the marriage partnership or is the product of the parties’ common endeavour.”   

A clear demarcation was drawn between cash or property and rights in pensions. The latter “rarely become ‘mingled’ during a marriage. They remain in the sole name of the person who earned the pension rights” ([34]). The Court made clear that as well as the actual use and enjoyment of an asset, “a common intention to put the asset into use and enjoyment in the future” may also give rise to matrimonialisation (ibid).

The parties had a conversation in 2013 when W received the gift from her father that the Gloucestershire property was to be placed in their joint names. HHJ Hess accepted W’s evidence that H had said words to the effect of ‘it doesn’t matter that I am not contributing to the purchase price because we will share everything equally in our marriage, everything comes and goes out of the same pot’. Whilst His Honour made emphasised that this broad statement could have been, and likely was, referring to other assets such as H’s company shares, it was of note that no express reference had been made to the pension. This form of wording was not deemed sufficient to have given rise to the matrimonialisation of H’s pension rights. More, His Honour deemed, would be necessary to meet the test in Standish.

The Court’s Conclusion

The Court conducted an evaluation of the s.25 Matrimonial Causes Act 1973 factors, determining that in light of the standard of living which the parties enjoyed during the marriage, the age of the parties and the duration of the marriage and respective contributions, W’s housing needs could be met by remaining at the Bristol property. H would be able to afford something similar if he so chose.

HHJ Hess turned to consider the parties’ respective earning capacities. Given W’s absence from work, her age and her health related issues, and the fact H had substantially decided to retire at the same age W is now, His Honour determined that it would “not be appropriate for met to place into these calculations any figure for an earning capacity and it is reasonable to assume that she will have no earned income in the future.” ([39])

The Court determined that W’s case could not fairly justify a needs claim beyond the level of the sharing claim. A reasonable figure for W to meet her reasonable spending needs fell in the range of £60,000 – £65,000 per annum. A pension sharing order for 27.5% of H’s pension was deemed appropriate, with a lump sum payment from H to W of £724,654. The Devon property was to be transferred to H or be subject to an order of sale with 100% of the proceeds going to H.

Practical Takeaways

• Wanton or reckless dissipation targeted at reducing the other party’s claim is required to meet the high threshold for an add-back
• Whilst pensions can be subject to matrimonialisation following Standish, more specificity as to the mingling of the pensions themselves is needed beyond broad acknowledgement of ‘everything coming and going out of the same pot’
• Pensions are subject to a holistic fairness assessment, blending mathematical formulae with the broad brush of fairness

The judgment can be found here.