Do couples often overlook sharing their pensions after divorce?

It is common for many couples after divorce to focus mainly on their immediate requirements, such as who should have the marital home, or how they are going to provide for their children. This leads to many separated couples overlooking their pension provisions.  How important are these pension schemes? Having a pension sharing order could dictate how you are able to spend your retirement or what age you can afford to retire.

It is frequently the case that one party to the marriage will give up work or work part time to look after the children or to maintain the marital home and the other will continue to work. Therefore one party will obviously keep building up their pension, whilst the party at home does not have this luxury. This often leads to couples where one will have a substantially larger pension pot than the other or potentially the person at home may have never worked throughout the marriage and has no existing pension.  Consequently, when the divorce is finalised one party gets a large pension to live off, leaving their ex-partner with limited pension resources. This is surely unfair when both parties have equally provided for this marriage.

How can this unfair imbalance be prevented?

The best way to prevent this imbalance is to be fully aware of your legal right of entitlement to a percentage of your ex-husband/wife’s pension when you are seeking a divorce. This allows you to consider the option of applying for a pension sharing order.

What is a pension sharing order?

This is an order against a pension scheme belonging to a party to the marriage. This allows the party claiming an order against their ex-husband/wife’s pension scheme to claim a percentage of their accrued pension pot. Unfortunately, it is rarely as simple as dividing the scheme equally, therefore instructing a solicitor to help with this process is invaluable so that you are aware of the factors that will be considered when deciding on the percentage to claim. Common factors that are considered will include the age of the parties, earning capacity, length of marriage and how close the couple are to retirement. It may be that there needs to be an actuarial report prepared by a pension actuary. 

What are the benefits of a pension sharing order?

For older couples, it is a desirable arrangement so that both parties can enjoy retirement. Further if a couple is close to retirement, it is unlikely, they will build up a substantial pension before retirement age is reached and so sharing a scheme is the fairest outcome, so that both parties to the marriage can enjoy retirement. Additionally, pension sharing orders are not altered by remarrying, so if one of the parties is thinking of remarrying this makes a pension sharing order desirable compared to other orders that are affected by remarriage.

Are more people applying for a pension sharing order?

The Ministry of Justice between 2014 and 2017 investigated the rise in pension sharing orders. In this time, there was an increase of 2,000 people seeking a pension sharing order. This shows that there is beginning to be an increase in the number of pensions sharing orders sought from divorcing couples.

If awareness is created of pension sharing orders, then it is hoped that this will prevent those with a lesser pension having to continue to work until an older age or having limited funds for their retirement years.

If you need any help with your divorce and finance petition, then please contact Family Law Direct at www.familylawgroup.co.uk and book your free initial 15 minutes phone call by pressing ‘book online’.