Pensions on Divorce
As FLiP Director James Pirrie comments, pensions accumulate usually in the earning party’s name. That may need attention where there is a divorce in a family where, for example, one party has built up the pension whilst the other might earn at a lower level or not at all because of children/ caring/ supporting responsibilities. Here sharing the pension between spouses (or civil partners) may be appropriate because a) it has been built up during the marriage; or b) one spouse is financially dependent and needs that share of the pension to help to achieve a financially independent future.
The family court redresses the balance by making a pension sharing order.
Stock market performance is causing pension assets to soar but a month ago, on the 15th August 2021, The Sunday Times reported on a Freedom of Information request that the number of such orders was – surprisingly and worryingly – reducing. It looked as if pension sharing orders that had reached a peak of 9,194 (itself a far from impressive number in the context of 94,900 divorces) in 2017 had fallen back to 7,742 for 2020.
Many of us are taken back to an excellent presentation in February 2021 where we were bombarded by jaw-dropping statistics showing how the financially more vulnerable tend to exit with less of the combined pension; the poorer, (often) female and out of London are doing particularly badly. In London high property values might put pension assets on a par with property ones, but away from the inflated prices of the South East, many have pensions worth considerably more than their homes.
There are many explanations for the drop in numbers but whatever the situation the Pension Advisory Group’s (PAG) efforts over the last years are a welcome counter-current. The Group’s members include FLiP’s Head of Mediation, Dominic Raeside, and the launch of this video prepared by the University of Manchester (in consultation with PAG and Action Now), is a much to be applauded endeavour to raise awareness of the problem and encourage those who are separating to be cognisant of what they may be giving up. Expert advice is available.
For those who prefer DIY research, “PAG2” is an excellent starting point. https://www.advicenow.org.uk/pensions . A page-turner? Perhaps not. But if relevant to your situation it is difficult to think of something that may have greater long-term impacts.