Investing in your future: Understanding pensions and divorce

Recent guidance from the Pension Commission says that millions of people across Britain are not saving enough for retirement. In particular, there is a saving gap between men and women, with women having, on average, £81,000 saved by the time they approach retirement and men averaging £156,000 (At least 15m Britons not saving enough to retire, Pensions Commission says | Pensions | The Guardian). 

This research is likely to be unsurprising to many family lawyers. Often, someone going through a separation will approach a family lawyer having already come to an agreement with their former partner as to how they intend to divide their assets. In this situation, pensions are often overlooked. 

It can come as a surprise to couples that pensions can be shared on divorce. However, pension savings are often vital to meeting needs in retirement.   

The Court can make a Pension Sharing Order or a Pension Attachment Order as part of a Financial Order on divorce, although Pension Attachment Orders are rare. A Pension Sharing Order uses a percentage of one person’s pension fund to create a separate pension fund for their former spouse. 

Calculating the percentage pension share required to equalise parties’ pensions can be complex, requiring a Pension on Divorce Expert Report in many cases. 

Pensions must be taken into consideration in any financial negotiations arising from a divorce in order to ensure that both parties are fairly provided for in their retirement. This is an area where it is often essential to take expert advice. 

For more information on pensions and divorce, please contact Rebecca Curran, Trainee CILEX Lawyer in the Family Law Department at SE-Solicitors at rcurran@se-solicitors.co.uk.