A NEW law which could force divorcing couples to share pension funds iscausing widespread concern, especially to those with business interests.

But is there a cause for panic? Probably not!

A tax-effective way for business people to protect income and profits has always involved investing in a self-administered or personal pension fund. In many cases these pension funds can have significant value.

Whilst in the past the divorce courts' power to interfere with a pension was limited, this new law gives courts a free rein to carve up pension funds.

In such cases, therefore, it is vitally important that specialist legal and accountancy advice is taken. Providing the correct procedures are followed, the interests of all concerned can be protected.

As a specialist in family law I am finding more and more people expressing concern. Mind you, I am not surprised for we are talking about a very involved piece of legislation which has wide reaching ramifications. The Welfare Reforms and Pensions Act of 1999 has complex and potentially thorny implications. Right now the first cases affected by the law introduced in December 2000 are starting to hit the courts.

The new law views pension schemes, apart from the normal State pensions scheme, as just another asset to be divided up as part of the totality.

Consequently, a spouse's pension fund could be halved by their 'soon-to-be-ex' who, in turn, can demand a separate fund to be set up.

It seems many people believe that they will be giving up more in a settlement than before, but that is not necessarily the case. The old legislation and indeed the new mainly affects the husband who still tends to be the main breadwinner as the wife has often missed the chance of building a pension pot due to career breaks in order to raise children.

Don't misunderstand, it can, of course, apply to the wife as much the husband in many cases.

For a few years now, the Courts have had the ability to compensate wives in divorce cases where they would lose out on the husband's pension by awarding the wife a cash lump sum, or by 'earmarking' the husband's pension.

With an earmarking order the weaker spouse was given the right to partake in some of the husband's pension rights. But she was always dependent on the husband, for example deciding when to take his pension and she could also lose those rights if she re-married.

The difference now is that the wife can ask the Court to transfer monies out of the husband's pension to create a pension fund of her own which remains hers, whether she re-marries or not.

Whilst the new law is not an automatic right for the wife to dip into the husband's hard earned pension scheme, the wife now, for the first time, in leaving married life does have the right to ask the Court to create her own pension fund - carved from the ex-husband's.

So, what to do? The best advice is, get the best advice!

Remember, so long as everything is handled properly and professionally, there is no cause for alarm.