"While divorce rates have continued their long-term decline, this doesn’t tell the full story. Many couples simply can’t afford to divorce, but also marriage itself is becoming less common. The latest ONS figures from earlier this year show an 8.6% drop in marriages in 2023 compared to the previous year. Increasingly, people are choosing to live together without marrying, which brings additional financial challenges when relationships end.
“Married couples still make up the largest proportion of families at 65.1%, but this has fallen from 67.1% in 2014 as cohabitation rises, and the median age for marriage is now at its highest on record. That potentially means when people are coming together to marry later in their working life, they’re bringing established pension pots with them.
“Pensions are not just an individual pot; they are an asset like any other and should form part of any financial settlement. Yet only around 11% of divorces involve pension sharing, despite the fact that pensions can be worth more than the family home and provide guaranteed income for life. Offsetting a pension against property may seem a simpler and cheaper alternative, but it can lead to unfair outcomes because a house cannot deliver income in retirement and downsizing might not give enough money.
“Unlike marriage, cohabiting couples have very limited legal rights on separation, and pensions – often one of the most valuable assets – cannot be split. This can leave one partner, often women, significantly disadvantaged in retirement. So, while not nice to consider, for those who are in long term cohabiting relationships, it’s important to think about what might happen if the relationship ended.
“When a marriage is breaking down it’s crucial to either start a new relationship with, or make the most of an existing relationship with, a professional adviser. It may feel like an extra cost at a difficult time, but understanding the true value of pensions – especially defined benefit schemes – can make a huge difference to long-term financial security. If you’re divorcing, planning for both today and tomorrow is essential to ensure fairness and to protect your future."
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