Following the breakdown of the marriage, there are usually a number of financial issues to be resolved. Understandably, most often a separating couple concentrates on things like the future of the family home, and how any children of the family will be supported. However, this leaves out a major part of the matrimonial “pot” – pensions.
For over 20 years in England and Wales, it has been possible to split pensions on divorce. But research from Manchester University and the Pension Advisory Group in 2019 suggests that often pensions are either ignored or not split fairly by couples during a divorce.
Pensions can often be more than the value of your house
Many people don’t understand the significance and importance of having pensions in place for later life. And most do not realise the true value of their pensions, which can often be greater than the value of their house. The researchers found that in many cases it was still the male breadwinner who had the better pension provision, and that men become emotionally attached to their pension assets.
As a result, when it comes to divorce women are far more likely to prioritise keeping the family home, whilst men are more focused on keeping their pension. These findings suggest that a wife who was the main carer of children would prefer to keep the family home, believing this to be the ‘better deal’.
Often, that is not the case. The difficulty that this causes is that even the increase in the value of the house will not provide enough capital to provide a decent pension when the time comes to retire, so you could be left with a mortgage-free home but unable to afford to live in it because your pension is not enough.
Divorcing couples need to understand the value of their pensions
The conclusion that Family Lawyers have drawn from this research is that divorcing couples need to be helped to have a better understanding of the importance and value of their pensions. This will help them make an informed choice that combines securing them both a home, while ensuring they have some pension income in retirement.
If you are about to separate or divorce, make sure you get proper advice which takes into account pensions and the impact they can have upon your future financial security.
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At Harold Stock & Co Solicitors we offer a free of charge, untimed initial meeting with a family law specialist. There is no obligation to instruct us following this meeting. We will outline the options available to you and discuss the costs.
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