Going through a divorce can be one of the most stressful and uncertain times in someone’s life. It can be challenging on both an emotional and a financial front. When going through these proceedings, it is normal to worry about what will happen to your assets: your house, the cars, the bank accounts; but what about your pension?
Pensions are important to each individual, and it is common for these to be the main asset people rely on in retirement to fund their lifestyle. Pensions also tend to be one of the most significant financial assets accumulated during a couple’s life together. While one spouse may choose to work while the other stays at home to care for children, or other reasons, they may rely on the working spouse’s pension to provide an income for both of them in retirement. Therefore, when going through divorce proceedings it is important they are recognised and divided fairly.
However, according to a Which? survey[1], seven out of ten do not share or even consider pensions in the divorce proceedings. It is far too common that pensions are ignored. While retirement may seem far away for some, it is important each spouse has a fair proportion of the matrimonial retirement savings.
Neglecting pensions during divorce proceedings may lead to consequences in the long term. It may result in one spouse receiving an unequal share of the marital estate, potentially leaving them at a financial disadvantage in the future. Proactively addressing pensions in divorce settlements is a strategic approach to safeguarding the financial interests of both parties.
Overall, understanding and recognising the importance of pensions in divorce is essential to ensure a fair split of assets, so no one is disadvantaged. Each party should go into the proceedings considering their pensions, and once split and complete, seek financial advice to reevaluate what their retirement may look like. It is important to speak to a professional in this area, such as a family solicitor.
All content correct at time of writing (February 2024).
[1] Which? article 22 July 2022; Seven in 10 divorcing couples don't share pensions - Which? News
