Law firm Prettys has urged those going through a divorce not to overlook the importance of claiming a share of their partner’s pension in favour of pursuing the marital home.
Matthew Clemence, senior associate, Prettys, said: “In a lot of cases people don’t seem to value pensions in the way they should do because they’re not focused on their long-term future and prefer to have the house.
“But as part of divorce proceedings, pension funds can be shared. Even when made aware of this information, many people still often prefer the house as they believe it is the most lucrative option. And only when they approach retirement do they realise they have missed out on a significant retirement income.”
Clemence said that those with a smaller pension than their partner will not necessarily be left worse off in divorce proceedings. In most cases, the higher earner will have a bigger pension pot than a parent who has undertaken the majority of maternity or paternity leave, however courts take this into consideration.
He said: “Courts look for fairness for the future and will benefit whoever in the relationship is financially weaker, which in our experience tends to be the parent undertaking the majority of care for the children.
For couples approaching, or over, the age of 50, the court can also be asked to consider the income value of the pensions and divide with reference to this rather than capital value.
However, the same does not apply for cohabiting couples, who do not have the same rights as married couples. Currently, more than three million unmarried couples choose to live together and cohabitation remains the fastest growing family type in the UK.
Clemence added: “With increasing numbers of couples cohabiting, there could be a consequential effect of this in generations to come, meaning people should be even more focused now on their financial future and pension planning.”