Will no fault divorce lead to people failing to receive entitlement relating to their spouse’s pension?

No fault divorce is seen to be a watershed moment in divorce law. It must be of benefit to spouses whose marriages have irretrievably broken down to be able to end their marriage without recourse to placing blame on the person that they may have loved for many years and brought up children with, but for whatever reason they can no longer remain married to. The end of the blame game is a major improvement.

However, we have certainly seen more people who contact us looking to deal with divorces themselves.  No fault divorce is seen to be simpler. Nevertheless, the procedure for obtaining your divorce has not in reality changed very much and the concern is that people will simply concentrate on obtaining their divorce and then, if they own a house, sell that property and split the proceeds usually equally.

However, they are missing the issue of pensions. Some people do not realise that when they separate after many years of marriage they are entitled to a share of their spouse’s pension, which they may achieve by way of a pension sharing order made within the divorce process, or alternatively, if one spouse has a better pension that then other, that could be off-set, with the other person receiving a larger share of the family home.  All cases of course depend on their own circumstances, there are often quirks, even in what seems to be the simplest of cases and that means people still need to obtain expert legal advice, even when they think that obtaining a divorce and their financial circumstances are simple. That is certainly my experience and seems to be backed up by a recent survey by Aviva, where 1 in 6 divorced people did not realise their pensions could be affected by splitting up.

Pensions can sometimes be worth more than the equity in their family home and if not, are certainly usually their second biggest asset after it.

Not obtaining legal advice is a false economy. Separating couples need to understand the impact of their separation upon their finances and understand that also includes both parties’ pensions. Many independent financial advisors who may be pension on divorce experts, or pension actuaries, can provide invaluable advice concerning the benefits held by both parties’ pensions, which may not be as straightforward as simply comparing the cash equivalent transfer values of those pensions. They could also provide valuable advice to show separating spouses their financial positions in the years to come and realise they may be in a difficult financial position when in retirement where one of them has insufficient pension provision to support them in the lifestyle that they are used to.

If you need further information, please contact the Family Team or contact Aaron Keene directly on [email protected].