Expert view: Could your finances face a divorce settlement?
Official figures showed that the number of divorces in England and Wales rose in 2010 for the first time in almost a decade, with some commentators suggesting the recession could have put relationships under strain.Increasingly, financial settlements ordered by the courts after couples split up now include an arrangement to divide the main earner’s pension pot.
The retirement fund of the main breadwinner could be a household’s biggest asset with cash in short supply and houses worth less money.However, whilst reviewing any finances as part of a divorce settlement, it’s important to identify all pensions, current debts, insurance, investments and savings, so that they can be dealt with effectively, enabling both divorcing parties to maximise their entitlement.
The age of divorcees is also on the increase, whereas younger couples divorcing may not have too much financial dependency, more and more people are divorcing within a decade or so of retirement and may find it difficult to replenish their savings quickly enough to enjoy the same sort of lifestyle they may have experienced as part of a married couple.Stuart Mather, financial adviser at Taylor Patterson, said: “It is important that individuals who are faced with impending divorce not only receive appropriate advice from their solicitor but also their financial adviser. There are a number of different ways pensions can be treated in arriving at a fair settlement whether that is through pension offsetting, pension attachment or even pension sharing. "People need to realise the importance of looking beyond the valuation given by the pension provider, the cash equivalent transfer value, and to seek an accurate valuation of a pension from an actuary. With some one in three marriages now ending in divorce and more than four million divorcees in the UK, people will also benefit from reviewing their overall financial planning after a divorce or breakup”.