Industry experts have emphasised the need for savers to be aware of the impact divorce could have on their pension, ahead of Pensions Awareness Week.
National Family Meditation (NFM) CEO, Jane Robey, explained that pension funds still count as assets during a divorce in a similar manner to money in a bank or savings account, with NFM reporting that disagreements over pensions and finance feature in 20 per cent of the cases they deal with.
“It’s hardly surprising though that financial issues are one of the biggest reasons for fall outs, and certainly one of the most common issues that we encounter in family mediation,” Robey commented.
However, Robey acknowledged that it is "often a shock" to people that they have to take account of their pensions in a divorce, with individuals often some years away from the age where they can access pension funds.
Indeed, previous industry research from Which also found that 71 per cent of its members are not including pensions in their financial settlement.
Despite this, Robey emphasised that taking account of a pension forms part of making full financial disclosure to achieve a financial order as part of the divorce proceeding, explaining that there are a number of different ways couples could divide their pension pots.
This includes pension offsetting, where the value of any pension is offset against other assets, and pension sharing, where a percentage of the saver’s pension is shared with their ex-partner, but the saver remains in control of it.
Pension earmarking, where one partner can pay a portion of their pension income to the other partner when it be begins to be paid, either part of the pension income or the lump sum was also highlighted by Robey.
Industry experts have previously raised concerns over the treatment of pensions during divorce proceedings, with industry research revealing that 60 per cent of women did not get a share of their ex-spouse’s pension as part of the financial settlement in their divorce, while the use of pension sharing orders has also been in decline in recent years.
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