Divorce is always a sad and challenging time, made worse by the need to deal with family assets like the marital home. Much of the focus is quite rightly on making the best possible arrangements for any children involved. This often necessitates dealing with the family home, assessing its worth and apportioning its value.
Today, pensions can also represent a major financial asset that needs to be apportioned fairly between the couple. New research1 shows that women can lose out when it comes to sharing pension wealth on divorce. Apparently, women who divorce can end up with less than a third of the average pension wealth, with the average divorced woman over 50 owning pension wealth of £131,000 compared with £454,000 held in pensions by the average married couple.
Getting the right advice
Pensions can often be overlooked when dividing wealth on divorce. Many people think a pension solely belongs to the party who is named on the policy, but that’s not the case. A pension has to be considered in the division of the couple’s finances. Pension assets can be apportioned in various ways, by:
- dividing the pension fund into two separate pensions
- offsetting the value of one spouse’s fund by transferring a lump sum, or other assets, to the other spouse
- arranging that when a pension comes to be paid, a portion goes to the other spouse.
Calculating the value of a pension can be complex, so it makes sense for women going through divorce to seek financial advice to ensure that they aren’t missing out on a fair share of what can be a very valuable asset.
1 Royal London, 2019