16 September 2019 | Comment | Article by Lisa Russell
The average divorced woman over 50 will have a pension worth three times less than the average married couple of the same age*. Whilst a woman may be entitled to claim a portion of her spouse’s pension in a divorce it can often be difficult to calculate the true value of the pension as the benefit may be paid out far in the future.
The average divorced woman will have a pension worth £131,000 compared to £454,000 for an average married couple.
For many couples pensions are often highly valuable assets, often more valuable than the family home - co-operation in settlement can save both parties thousands. For example, if one spouse has a large pension that is nearing the lifetime allowance of £1.055m and the other has a small pension, a pension sharing order could effectively equalise pension rights meaning that a lifetime allowance charge is unlikely to arise in the future.
Understanding the value of any pension benefits in the context of any other matrimonial assets and debts is essential in deciding how to split assets.
It is always advisable for anyone facing divorce to see an Independent Financial Adviser (IFA) at the start of the divorce process, so they can discuss what they want to achieve and instruct their legal team. After the divorce settlement, the new divorcee should see their IFA again to plan what to do with their remaining or additional assets. Reviewing pension pots and the funds that they are invested in is paramount to ensure retirement objectives are met. This is even more important if the value has been eroded following a divorce or additional lump sums added.
The Hugh James family team and Hugh James Independent Financial Advisers work closely together to assess both your financial and legal issues within one firm. We work with clients all over the country and have offices in both London and Cardiff.