Divorcing couples should not overlook pensions assets

2 February 2022

Latest Office for National Statistics (ONS) figures show that divorces in England and Wales are down year on year, but this may be a lull due to the pandemic. Where paraplanners are dealing with divorce, pensions assets are key. 

The number of divorces is down by 4.5% according to the latest ONS figures, this is likely due to couples holding off getting divorced or being unable to access legal services due to lockdown restrictions.

Clare Moffat, head of intermediary and technical team at Royal London, says because divorce is an emotionally and financially traumatic time, many aspects of a couple’s finances can be overlooked, particularly pensions. “Failing to consider pension savings when splitting assets during a break-up could have an enormous impact on the future financial resilience of individuals,” she warns.

“The impact on retirement plans can be particularly difficult for women who, partly due to career breaks and lower average salaries, typically build up lower pension pots.

“Taking financial and legal advice is crucial. This will seem like another expense, but research shows that financial advice means people have more money in retirement.”

Amanda Rimmer, partner in the family law department at Stephensons, adds that the data “highlight the challenges many couples faced during a time of huge uncertainty.”

“We know that the pandemic exposed the fault lines in many relationships. Navigating the challenges of 2020; including job worries, financial insecurity as well as the lack of support structures, meant that some relationships very quickly reached breaking point.

“The practical impact of lockdown measures prevented many couples from being able to physically separate. Finding somewhere else to live became very difficult because of the restrictions. Unknowns around the pandemic and the outcomes for families generally, saw couples putting off decisions to end their marriage. It’s only now that we are starting to see those couples come forward, having made the decision to bring their marriage to an end.

“One of the key elements in analysing these divorce figures is whether we see a spike in numbers once no-fault divorce laws come into force later this year. We know that some couples, where there is a mutual decision to separate, are waiting until that point before pursuing divorce proceedings.”

Professional Paraplanner