According to new research by Scottish Widows, 7 in 10 couples fail to consider pensions during divorce proceedings and this leaves women short changed by £5 billion every year, losing out on benefits after the end of their marriage.
Also, of concern is the research’s findings that almost half of women (48%) have no idea what happens to a pension when a couple gets divorced.
In the UK, pensions are one of the assets subject to division when a married couple separate. It is essential that all pensions (and previous pension schemes) are taken into account when parties are considering how to divide their assets. If the parties are negotiating through Solicitors or issue court proceedings, then they will be asked to complete a detailed Form E setting out terms and details of their finances and provide documentary evidence of the cash equivalent value of their pension.
The gap left behind by the legal aid cuts now means more couples are trying to resolve matters between themselves and in some cases, the parties get divorced without resolving their financial assets.
It is clear that according to this research, women in particular are at risk of losing out on pensions on divorce. This is particularly worrying given that according to the Scottish Widows research, the average married couple’s retirement pot is worth £132,000 – a considerable amount of money.
My top tips to remember if you are divorcing are as follows:
1. It is essential that you consider resolving your financial ties on divorce. Seek preliminary legal advice over the phone or in person to consider your options – this could be mediation, negotiation through Solicitors or court proceedings.
2. If you decide to try and resolve matters amicably with your spouse/former spouse, it is important that you have a clear and comprehensive picture of their finances. This should include any pensions. The standard way of ensuring this takes place is by both parties completing a Form E, in a civil setting, including documentary evidence of all assets including pensions.
3. Pensions are often one of the most valuable assets a couple have and need to be taken into account as part of any financial settlement reached.
4. If either or both parties have a pension, it is advisable at an early stage to contact your pension provider and ask them to provide written confirmation of the cash equivalent value of your pension. You or your Solicitor can explain that it is required for divorce proceedings. This usually takes several weeks to obtain this information.
5. Pensions can be complicated – there are many different types and they are not equivalent to capital. If pensions are one of the assets in the marital pot, there are a number of ways this could be divided and/or dealt with such as through a Pension Sharing Order or by Offsetting whereby the cash equivalent value of the pension is taken into account but the pension is not shared. In such cases, it may be necessary to instruct an Actuary to calculate the “set off” value. It may be that the other spouse then obtains a larger lump sum or larger share in any property whilst the other spouse retains their pension. Each case is different and it is important to consider what outcome suits the parties.
For expert legal advice on Family Law, help or any information on our services, please contact Tayo Taylor at MHHP Law Solicitors on 020 3667 4783.
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