A Pension Is The Asset That's Often Overlooked In A Divorce

A new tax year always brings with it fresh opportunities to plan your finances as tax efficiently as possible, now more important than ever due to the cost of living squeeze we are all facing.

- Tricia Phillips

However, the start of the new tax year on April 6 also marked a big change in UK divorce law, with the introduction of the ‘no fault’ divorce.

This replaces the previous ‘five facts’ (adultery, unreasonable behaviour, desertion, separation for two years or more, and separation for five years or more) with a statement of irretrievable break down and removes the need for a ‘blame game’.

You are also no longer required to be legally separated for a minimum amount of time before filing for a divorce. This speeds up the whole process but also effectively removes contesting the divorce.

Divorce rates are likely to rise even quicker now, but what does all this mean for your finances, especially when you look past the most obvious shared financial commitments, such as your mortgage? While loans, credit card debt and savings might be easy to divide, pensions can be trickier to split, and for some people they can be more valuable than the family home.

Yet this vital asset often gets left out of divorce settlements. According to pensions expert Ros Altmann, less than two in 10 divorces have pension sharing orders attached, where pension savings are officially split. This can leave many divorced women, especially, struggling in retirement. Altmann says divorced women can typically have half the pension provision of their married counterparts.