Divorcing individuals now face a greater risk of having their assets unfairly divided, particularly pensions, thanks to the introduction and popularity of “DIY” divorces, with women being most likely to lose out. Some spouses could even lose out on as much as thousands if pensions aren’t divided fairly during a divorce.
What is a DIY divorce?
Since 2018, it has been possible for divorcing couples to submit their legal divorce paperwork and marital agreement on their own, without the assistance of professional legal representatives. These are referred to as DIY or ‘do-it-yourself’ divorces. In recent years, this type of divorce has become a popular option, especially for couples looking for a quick and civil solution.
Why are Pensions so important?
Pensions are usually the biggest asset for divorcing couples and make up to 42% of total household wealth, according to the Office for National Statistics. The most common way of splitting retirement pots is through a pension sharing order, which divides your pension upon divorce.
Since the introduction of DIY divorces, there has been a decrease in the number of requests for pension sharing orders with only 22% of divorces in England and Wales including an application for a pension sharing order in the first three quarters of 2022, compared to 33% in 2017.
Ensuring that pensions are split fairly in divorces is of great concern as statistically, men benefit most, leaving the partner with the smaller pension pot behind. The divide between women’s and men’s pensions is stark, with women on average having around 26% less saved in their pensions than their male counterparts.
So, what can you do about it?
During a DIY divorce, it is very possible for a divorcee to overlook pensions as they can often appear intimidating and overly complex for people, but it is crucial to anyone seeking a fair split of financials to consider pensions during the divorce.
Pension sharing orders are significant because they require the spouse with the most pension savings to contribute part of their pension pot to their ex-partner. For one of the divorcing couples, skipping this crucial step could be financially disastrous.
Divorces can be devastating to your mental and financial health. That is why, early in the divorce process, consulting with a solicitor is critical to ensuring that all financially related assets are divided equally and fairly. We would always advise that no matter how simple the financial split a Consent Order is entered into and approved by the court to avoid the risk of your former spouse changing their mind and making a financial claim in the future.
If you want to learn more or have any questions about your own Pension sharing order, please contact us at 020 8891 4311 or email us at info@barongrey.co.uk to schedule a free non-committal initial consultation.
