Proposed government legislation that seeks to introduce ‘no fault’ divorces could leave many women “vulnerable” in retirement, according to Quilter head of retirement policy, Jon Greer.
The bill, which would allow divorce proceedings in England and Wales to commence immediately without one party having to accuse the other of adultery, unreasonable behaviour or desertion, will be debated by MPs in the House of Commons on Monday.
Greer warned that the proposals could also exacerbate the problems caused by people’s failure to make important decisions about their major financial assets, such as their pensions, during the emotional upheaval that comes with the end of a long-term relationship.
Greer warned: “This could see many miss out on important pension benefits and is likely to have a far greater impact on women than men, given they often have a less sizable pension of their own, leaving them financially vulnerable in their later years.”
To display this, he cited data from the Pensions Policy Institute which showed that the average divorced woman has less than a third of the pension wealth of the typical divorced man.
Meanwhile, figures from the Family Law Courts showed that just 13 per cent of 116,612 files for dissolution in 2019 contained some sort of pension settlement order.
Greer also claimed that the timing of the bill was “questionable” due to coronavirus, noting that people are already “under increased strain financially and emotionally” due to the pandemic.
His warning comes after divorce law expert, Baroness Shackleton of Belgravia, told the House of Lords in March that divorce lawyers were predicting an increase in the number of marriages ending during lockdown as “peak times are after long exposure during the summer holidays and over Christmas”.
He added that couples going through a divorce had several options on the table for divvying up pension assets, including offsetting, where the pension assets can be offset against other assets of the divorcing parties.
Couples could also opt for a pension sharing order, where retirement assets are cleanly divided at the time of separation, or pensions attachments orders, which would result in the pension provider of one party paying an agreed amount direct to the former spouse when the pension rights come into payment.
Greer noted that pension sharing orders “remain the preferred way of splitting these assets”, but added that “pension attachment orders have risen in popularity at a greater rate over recent years”, though it was not clear why this was.
Greer commented: “Divorcees need to make sure they are receiving professional advice, both legal and financial, before, during and after any divorce case to ensure any settlement is fair for all parties involved. It should not be acceptable for pensions to be ignored, since they will have a major impact later in someone’s life.”
— to www.pensionsage.com