The now ex-minister for women & equalities, Penny Mordaunt, announced the government will be updating the online divorce process to ensure couples are aware of the benefits of pension sharing, citing that “only 36 per cent of asset sharing agreements include sharing of pensions - this means women lose out on financial security later in life.”
The news was generally welcomed, as it has been flagged in recent years that pensions can be left out of divorce negotiations, with women often negatively impacted and out of pocket.
Research from Scottish Widows in 2017 showed that the pension discrepancy between genders is significant – almost double, in fact; men save £125,000 on average, compared to £64,000 for women.
Further good news relating to pensions and divorce came in the form of new guidance from the Pension Advisory Group - which is aimed at family judges, lawyers and pension experts and worth a read for anyone advising in this area.
This guidance is designed to encourage fairer settlements and “to make outcomes more predictable and consistent for divorcing couples, their advisers, and judges across England and Wales who deal with these issues daily.”
Research which led to this guide being published, revealed that of the 369 court files studied, 80 per cent contained at least one relevant pension and yet only 14 per cent contained a pension order.
The guide underlines the importance of including a pension in the final divorce settlement, emphasising that "ignoring the pensions or agreeing to ignore the pensions is not an option."
But how have we got to this position and why are pensions so often overlooked in a divorce?
And if a pension has been disregarded in the divorce negotiations, is there anything an individual can do to claw back the money they’re entitled to?
After the family home, pension pots are often a family’s most valuable asset but confusion over how to split a pension and even how much is available can often factor into a couple neglecting this asset.
Furthermore, sometimes a spouse may be unaware that they’re entitled to a share of their husband or wife’s pension, feel like it’s not theirs to take, or would prefer a ‘clean break’ and mistakenly believe that receiving half of their spouse’s pension will mean they have to get back in touch – especially off-putting if the couple is young and retirement is a long way away.
