Financial & Legal News

Divorcing Couples Increasingly Forced To Break Into Pension Pots

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Divorcing parents struggle to meet costs of supporting children.

A growing number of divorcing parents are reportedly raiding their pension pots in order to pay for the short-term costs of supporting their children.

Figures recently revealed show that the number of pension sharing and attachment orders made in divorce cases involving children rose by 8% on the 2010 figure of 2,353 to 2,533 in 2011.

Daniel Prince, family law partner at Pearson Solicitors in Oldham said: “With two in five marriages ending in divorce, what happens to the pension pot is becoming more significant."

A 'perfect storm' for divorcing couples

He added: “There is a perfect storm of factors influencing the trend to pension sharing orders: – more couples nearing retirement age with substantial pension funds divorcing, stagnant property prices, younger families often having negative or little equity in their homes, and high inflation eroding savings have meant that a growing number of divorcing couples are finding that pensions are the most appropriate asset to be divided.”

55 years is the age normally that divorced parents can take the lump sum from their pension to help with the cost of financing their children's upkeep.

Financial advice in divorce cases

Pearson Solicitor’s pensions specialist, Simon Taylor, who works closely with the firm’s family clients to help with arranging finances post-divorce and separation, says valuing the pensions in order to determine the split is often the most difficult aspect.  

"Your pension may well be the most valuable asset in your marriage. Sadly, the trend to seek a fair split in the pension pot does not mean that both partners can look forward to a secure retirement.  Divorced people can expect to be on average £2,600 a year worse off when they retire and a pension pot may already be set aside to pay off an interest only mortgage."

Simon added: "Having said this, our final aim as legal and financial advisers is still to ensure our clients receive what they deserve in the ultimate pension split so that they can start to plan their life."

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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