You cannot afford to Ignore Pensions on Divorce
Last month I was lucky enough to gain some “must be shared” valuable insight from an academic, Professor Debora Price, into the systemic problems of pensions on divorce. Not only is our pension system probably the most complex in the world but it is also highly gendered, largely though not exclusively favouring men. The complexity and gender imbalance combined with our discretionary financial remedy court process is a toxic blend indeed.
Across the EU there is a 39% average gender gap between male and female pension provision with the UK’s gap being one of the worst at 41%. No wonder, with our part time female workers culture, gig economy, childcare being seen more women's work than a man’s and invariably lower pay for women.
Too often in some family law financial settlements it is said there are insufficient funds in the budgeted income needs of the parties to allow a future pension for a wife to be built that might match that of the husband. On the back of financial pressures often exacerbating marital break down, many women face a lower standard of living or poverty, if not during their working lives, then in retirement. As a society we need to try to address both the cultural and institutionalised gender imbalance, but it is not proving an easy task.
Many people facing a divorce have a lack of understanding about the importance of pensions. Both men and women commonly ask their legal representatives to ignore pension provision when settling their financial claims. This could be for many reasons, such as;
- a lack of understanding
- too high an emotional cost (with too few people obtaining therapeutic assistance) when needing to deal with proprietorial arguments over ownership with pensions for some being the more valuable part of the marital resources
- too high a financial cost especially if a pensions expert’s report is needed
- only vague guidance on how to value any offset between a couple if an unequal sharing of pension is being contemplated – financial advice is recommended as well as legal advice
- desire to get a quick outcome and avoid delay
Alarm bells should ring in a client's mind if their legal adviser is inviting them to sign a waiver of liability where their instructions do not address pension inequality with on average, a man's pension today being four times more than a woman’s.
I recommend anyone reading this article to view the animation that was created with the help of Advice Now on their website.
Another informative source of information can be obtained from “The survival guide to pensions on divorce” created after a Pensions Advisory Report in 2019 identified the paucity of understanding and appropriate action being taken in too many cases. The guide is an excellent document for use by both family lawyers and clients alike and can be found…….
Lawyers at Whitehead Monckton offer collaborative or court process options to clients who need help to chart the complex area of pensions on divorce following marital breakdown.