Pensions may be the biggest financial asset, but they are often not part of conversation about divorce, interactive investor research finds.
It’s a sad fact that the first full working Monday in January is often referred to as ‘Divorce Day’ by lawyers, because there is often a spike in couples seeking to end their marriage following the festive period.
The first financial assets that come to mind in divorce or dissolution of civil partnerships are often property, investments and savings - but pensions despite often being the biggest asset, are often left out of the conversation says interactive investor.
One of the stark findings from interactive investor’s Great British Retirement Survey 2022 was that 65% of divorcees had not discussed pensions during divorce proceedings.
When comparing those retired with those yet to retire, almost two-thirds (82%) of divorcees in retirement didn’t discuss [pensions] when splitting the assets, compared to 68% among non-retired respondents.
In our Great British Retirement Survey, we came across numerous cases where divorce resulted in adverse financial consequences for individuals in or approaching retirement:
“I wish I had…asked for part of my ex's pension.”
(Survey participant 757)
“After a divorce and [financial implication of] Covid on pension savings, I don't think I will ever be able to retire!”
(Survey participant 36)
The introduction of no-fault divorce in April 2022, allowing couples to get divorced without one person needing to lay blame on the other, could impact divorce numbers.
Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Divorce is a vulnerable time, both emotionally and potentially financially. Many are suffering financial hardship, that may have been avoidable with better guidance, and it is troubling that so many do not discuss pensions during divorce proceedings. Many divorce proceedings start with a debate over who gets the house, but pensions can be an extremely valuable asset that should not be overlooked. But our research found that 65% of divorcees didn’t discuss pensions during divorce proceedings.
“Many people don’t know that pensions are typically viewed as a joint asset in divorce proceedings – even if only one spouse has built them up. Given a pension is often the largest asset people have – often even more than their home, it is well worth making sure that is part of the conversation.
“No one goes into a marriage with the intention of getting a divorce. The recent change in law allowing couples to get divorced without one person needing to lay blame on the other has made it easier to separate. In any event, it is always good to talk about money with your partner.”
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