The findings of research commissioned by Aviva are shocking but probably not that surprising to most experienced divorce lawyers. The research suggests that 15% of divorced people did not realise that their pension could be impacted by getting divorced and that more than 1/3 of divorcing couples made no claim on their former partner’s pension.
Many couples arrange their married lives such that one of the couple takes more responsibility for childcare and running the home whilst the other works and accrues pension savings to support them both in retirement. Even in marriages where both parties work and accrue pensions, depending on the nature of their work, how much they earn and the pension scheme that they are with, their ability to support themselves in retirement, should they be divorced ,may be very different.
It is absolutely vital that couples consider pensions when discussing a financial settlement following the breakdown of their marriage. Pensions can often be one of the more valuable assets that the couple own and yet they are too often overlooked. Understandably, when a marriage breaks down, people focus on their immediate needs for housing and sufficient income to support themselves and their children. Their retirement may seem a long way off in the future and all too easily and too often people are dismissive of the potential claims that they could make in respective their ex partner’s pension fund.
There are a number of options for dealing with pensions when a couple divorce. Pensions can be shared with monies being moved from the pension pot in one party is name into a pension pot in the name of the other. Alternatively , pensions can be offset against other assets such as the equity in the family home. The second option is often popular with people who are concerned about their ability to meet their immediate housing needs. However, specialist advice on how to calculate a pension offset, or indeed a pension share, is vital. It is important to understand the true value of a pension and the benefits that that could generate in the future and, therefore, the benefit that someone might be giving up.
Aviva’s research goes on to report, sadly, that 32% of divorcees said they had to dip into savings and 20% said they used credit cards to cover everyday living expenses in retirement due to lack of pension provision.
In April, after years of lobbying by family lawyers, the law changed to allow no fault divorce. This marks a positive step forward for family law in this country. However, the risk is that more people will now deal with the divorce process themselves rather than instructing a solicitor. As a result many people will miss receiving important advice regarding the financial claims that they might be able to make and in particular with regard to pensions. Since the divorce process moved online there has been a decrease in the number of clients instructing solicitors when they first separate. Almost certainly that has resulted in many people pressing on with their divorce without giving proper consideration to their future financial security including into retirement.
Here at Taylor&Emmet we have expert lawyers who can advise you as to your potential claims and help you make informed decisions. Decisions made at the time of divorce will impact the rest of your life.
