New research from Aviva suggests that 15% of divorced people did not realise that their pensions after divorce could be impacted by getting divorced. More than a third (34%) made no claim on their former partner’s pension so that it was not included as an asset in the settlement when they did divorce. Almost one in twelve (8%) divorcees say they did not have their own pension savings as they were relying on their partner to finance their retirement.
As a result of divorce, as many as one in five (19%) say they will be, or are, significantly worse off in retirement.
Aviva’s research revealed that in order to supplement their income following a divorce, one-third of divorcees (32%) said that they dipped into their savings; one in five (20%) used credit cards for everyday living expenses; a similar number (18%) borrowed from friends or family; and just over one in seven (15%) regularly sold clothing, toys or other household items to make ends meet.
Aviva reported that one in eight (12%) respondents admitted to having to go out to work, having not worked before their divorce, or get a second job (10%). One in eight (12%) also cut back, or cancelled, their pension contributions, putting their future retirement income further at risk.
As the average age for getting divorced hits an all time high of 47 years and 5 months for men and 44 years and 9 months for women4, it’s fair to assume that the levels of wealth accumulated in couples’ pension pots may also be fairly high and so not including pension valuations on divorce could be costly.
As the research from Aviva goes to, it can be often the case that one party will have significant pension provision, and the other party may have little or none in comparison. Clearly, having a cash equivalent transfer value to consider for any pension assets could be a relevant factor in any financial settlement process on separation and divorce. There are several options available to the Family Court when dealing with pensions during the process of dealing with financial assets on separation and divorce – this includes pension sharing, earmarking and offsetting against other available readily identified capital assets but this can often be a very complex issue so, as well as seeking legal advice and help on the issues, sometimes it can also be beneficial for couples to contact seek separate independent financial advice on how best to value pensions and the cost consequence of any particular Order being made in relation to them.
This article is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.