Couples, and women in particular, have to be asked questions about pensions during the divorce process to prevent dishonesty when distributing finances, according to a charity.
Age UK says it should be harder to discuss pensions and, where possible, to forget so that they are split up fairly and so that one of the spouses – usually the woman – does not get worse during retirement.
It suggests that ex-partners sign a statement in which they say that they have considered valuing and distributing private pensions and acting accordingly.
Splitting finances: Connecting couples should be encouraged to consider pensions during the process, says charity
The charity says that many divorced women miss out on potentially large amounts, because often the issue of pensions is not even raised at this time, even if they have a lawyer acting on their behalf.
It cites an earlier survey by Scottish Widows showing that 71 percent of divorcing couples do not discuss retirement as part of their settlement, and that 48 percent of women and 41 percent of men have no idea what happens to pensions when a marriage ends .
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Anecdotal evidence suggests that women will give priority to monitoring the parental home to provide stability to children without worrying about pensions because they do not fully understand their value.
A decent divorce lawyer should encourage clients to discuss pensions as part of a scheme, but the findings of the Scottish Widows suggest that many legal professionals do not raise the issue or that couples do not choose to push it.
Women buried heads in the sand & # 39; more than men when it comes to pensions
Read a simple 10-step guide that everyone should follow for a richer retirement.
Cutbacks in legal aid also mean that many divorces do not even receive professional basic assistance. It is estimated that about half of the married couples do not use lawyers.
Because few people consider their pensions at this time – almost always at the expense of the female partner – it is imperative that something changes to push people on this route, "says Age UK.
Although it is not practical, but it is not always desirable to consider pensions in divorces, Age UK is of the opinion that a & # 39; nudge & # 39; must be done in the divorce process that encourages people to record them. & # 39;
Age UK explains that although it thinks that the subject of pensions should always be discussed at some point during the divorce process, whether someone has received legal advice or not, stronger coercion than the signing of a declaration should not be introduced.
This is because it costs money to appoint an actuary to decide how the final betting pensions are split, which offer a guaranteed income from the moment you die, so divorce lawyers do not tend to do so unless the transfer value is at least around £ 100,000. .
It is easier to split defined-contribution pensions, whereby people gradually build up a pot that is invested at their own risk to provide an income upon retirement.
Watchdogs stop unscrupulous divorces that capture pension pots
Financial watchdogs stepped back within a few years to stop divorces that use pension freedoms to sweep pension funds apart.
The reforms introduced in April 2015 mean that over-55s can now cash in their entire pension and spend the money, saving or investing as they wish.
But pension providers have to block people who are trying to cash in their entire savings at once as a way to avoid pension-seeking orders that force them to share their income with former partners.
A maximum of one in three women between 55 and 70 years of age has experienced a divorce, with major consequences for their pension, says Age UK.
The charity survey showed that two-fifths of women aged 55 to 70 depend heavily on their partner's income for a decent pension. Many have taken the time to care for children or other family members in the workplace.
The charity says that women who divorce do not necessarily realize how important it is to divide the private pension assets of their husbands – and so simply walk away without knowing they have lost it.
It highlights the cases in which two women participated in the focus groups, who, when they were married, paid the combined accounts that were used to pay a private pension in the name of their spouse. When they divorced, the pensions were not taken into account, so they lost everything they paid.
Age UK's new report says in theory that a divorce agreement or divorce agreement must ensure that, when she is married, the female partner leaves something behind.
But it notes: Women suffer dishonesty in the divorce process because of a lack of access to legal representation, partners who often exclude their pensions from a scheme and many inaccurate perceptions about the real value of pensions.
It is not a requirement of divorce to include pension assets in a divorce agreement nor is it an automatic right for the partner to know their value unless couples go through a financial procedure through a court.
However, when lawyers are involved in drawing up the settlement, they are more likely to be considered. & # 39;
There are a number of ways to deal with pensions during a divorce, shown in the summary below, compiled by the Money Advice Service.
Source: Money Advice Service
Caroline Abrahams, charity director at Age UK, said: "It is extraordinary and frankly unacceptable that so many women potentially miss out on considerable sums of money when they divorce, sometimes without even realizing that they have lost future income that would likely be theirs. been.
The government must act quickly to take account of private pension assets as a real part of the divorce process.
In recent years we have learned a lot about how women born in the 1950s have been hurt by steep rises in the age when they can take their state pension; Unfortunately, our new report has shown that many divorced women are also unfairly disadvantaged when it comes to private pension provisions.
It is crucial that women are helped to build a decent private pension, get the right information and advice at the right time, and have fair and equal access to private pension assets as a matter of law and practice. that they have built up with their husbands when they are divorced or robbed later in life. & # 39;
How many women and men have pensions and how do their work stories differ?
Baroness Ros Altmann, a former minister of pensions, says: & # 39; The financial regulation of a divorce must take account of pension assets, just like all the other money that arose from the marriage. & # 39;
She continues: "For far too long, women in this country have undergone a short pension adjustment. & # 39; They work less, earn less than men and are even disadvantaged by the AOW rules. That inequality between men and women is unacceptable in the 21st century – in the great Britain.
& # 39; Women who are over 50 years of age are particularly poorly served by the British pension system over the years. Too often it was assumed that a woman could rely on a spouse or partner's pension and therefore did not need her own pension.
& # 39; With a sharp rise in divorce rates and much larger numbers of women who are single at a later age, it is imperative that all women have the best possible opportunity to build up their own pension and also have a full state pension. # 39;
Fiona Wood, partner at McAlister Family Law, says: "Pensions, along with the marital home, are often one of the biggest assets of a couple. If the couple divorce all assets they have should be considered when determining what a reasonable settlement is.
"Although many people want to deal with their divorce amicably and want to spend as little money as possible on legal costs, this report from Age UK illustrates the problems that can occur if you do not seek advice from a specialized family court.
Legal advice does not mean that you will then contest your financial settlement through the court, paying substantial legal fees.
You can often seek legal advice to have more informed conversations with your partner, so that you know that you know how the law works and what you are entitled to, which can then lead to a financial agreement between you and you. & # 39;
Divide a pension into a divorce
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