The FT has reported that despite Succession Wealth’s findings that pensions form the biggest assets in divorces worth over £1m (on average 43% of the whole pot being attributable to pensions in such cases) the courts report that just 18% of all financial remedy orders include an order relating to pension sharing or attachment.
So why is this happening? Why are financial weaker spouses overlooking sizeable marital assets on divorce? In some cases it could be due to a lack of understanding; in others, by an undervalued Cash Equivalent. In my experience, the financially stronger party that has accumulated the pension pot is often driven to part with as little of their pension accrual as possible, looking to offset against other assets or pressure the other party into taking less than they are entitled. Either way, lack of legal advice or representation no doubt plays a significant role in this imbalance.
It’s so important not to overlook pensions when negotiating a settlement and whilst it may be tempting for some divorcees to focus on having more cash available to them now to buy a bigger property etc, it can leave them incredibly exposed and vulnerable in retirement.
Age UK has called for private pensions to be made a 'proper' part of the divorce process for those who don't settle their divorce through the courts.
The charity stated divorce settlements in court normally feature private pensions but outside of the courts this does not happen automatically, with many couples routinely considering how to divide up the value of their homes but not their pensions.