Pension sharing orders have been available as part of divorce proceedings since 2001 however according to a Nuffield Foundation report published in November 2023, they are included in only 11% of divorces despite frequently being the largest asset a couple may own.
The report concluded that the law did not need changing as a suitable legal framework already existed to achieve notional ‘equality’. It is clear however that greater consideration should be given to pension arrangements to achieve real fairness and to protect the interests of financially vulnerable divorcees.
Engaging with a financial planner during a divorce process can help to shape a divorce settlement and ensure it is fair to both parties rather than just relying on actuarial reports or crude offsetting methods that can ignore the true value of a pension.
A financial planner can help a person better understand pensions and the implications of the options available to them on divorce, furthermore they can also provide advice and recommendations around tax efficiency, savings, investments, and other assets and consider the situation as a whole.
When a person is going through a divorce they will go through a whole range of emotions. It is very important that their financial planner takes time to understand that each divorcee will have had different experiences of financial planning during their marriage. It is important to work closely with them to help them negotiate the complexities of their situation post - divorce but with real empathy for their situation.
One of the key elements to this planning is a ‘cashflow model’ which can help a person understand their financial position both before and after the divorce taking into account short and long terms needs and goals. It is a very important tool that can help consider different circumstances and potential outcomes to ensure the right decisions are made, providing peace of mind during a stressful and uncertain period.
Wealth Design Holdings Limited is an appointed representative of Corbel Partners Limited which is authorised and regulated by the Financial Conduct Authority.
The Financial Conduct Authority does not regulate cashflow planning.
This blog was written with Chris O'Meara of Wealth Design.
Wealth Design Holdings Limited is an appointed representative of Corbel Partners Limited which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate cashflow planning.
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