Over the summer ‘This is Money’ reported that there had been a 35% drop in pension sharing agreements in the last few years. The conclusion made, and stated by a family lawyer in the article is that “these figures suggest that thousands of divorcees are missing out on their share of the pension assets of their former spouses”.
The figures are based on the experience in England between 2017 and 2021, and the reason suggested for the large decrease is the advent of ‘DIY divorces’ in England in 2018. While the report is based on the English experience, anecdotal evidence suggests that in Scotland many couples also overlook or deliberately ignore the value of pensions in their separation/divorce.
This can be significant when considered alongside the fact that the average age at which individuals are separating has risen, with the ‘This is Money’ article citing nearly age 44 for women and over 46 for men. A study by Legal & General states that 25% of divorces are in the 50-64 age group. The relevance is that we would generally expect the older the couple are at the point of separating/divorcing, the greater the value of their pension funds. Indeed, pension funds can easily amount to more than the value of the family home.
In addition, there is some evidence that there are gender differences, with research from the University of Manchester suggesting that females are more emotionally attached to the family home, while males are more generally attached to their pensions, and neither position is necessarily ‘right’ for a couple. The research goes on to say that females are more willing to give up their right to pensions, but is this, financially, the best/right decision for the long-term?
So our three action points for those considering separating or divorcing are:
Richard Wadsworth and Polly Reaves are financial planners who have a specialism in helping individuals through separation and divorce.
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