Pensions - Articles - Aegon comment on ONS figures on divorce plus pension sharing

 Kate Smith, Aegon’s Regulatory Strategy Manager:

 “Marital status can have a massive influence on people’s finances. Divorce can be devastating, both emotionally and financially. While it’s important that couples plan their long-term finances together, it’s also important to avoid unnecessarily over-relying on one person for your financial future. Typically women still build up lower pensions than men, partly due to career breaks and taking up part-time work.
 
 “Financial assets, including pensions, are put into the mix and divided up as part of the divorce settlement. Pensions splitting and earmarking approaches were developed against a backdrop of individuals not having free access to take as much as they liked out of their pension. They can be complicated, time-consuming and expensive and don’t necessarily lead to ‘clean-break’ solutions. The pension freedoms open up new simpler opportunities for the over 55s to draw income from their pensions with total flexibility. This may offer better solutions on divorce, although any income taken is subject to marginal income tax which could potentially cut the value of their pension pot by almost half, while losing the potential of an income in retirement.
 
 “Some unscrupulous individuals may be tempted to strip out their pension pot and spend it before the divorce settlement to avoid sharing it with their ex-partner. To avoid this, it’s important that, in happier times, couples understand what pension both parties have built up.”