When Parties divorce all of the matrimonial assets are considered so that there may be equality and fairness in the final distribution of assets, whether the split is 50/50 or even 30/70 as can be the case.

Pensions are considered a matrimonial asset and in some cases parties may have equal pension Cash Equivalent Transfer Values or marginal differences in their pensions, in which case, a pension sharing order may not be appropriate. However if one part in the marriage has a significant pension or substantially more than their estranged spouse then it may be appropriate to consider as pension sharing order, this can be done within court proceedings or during negotiations between solicitors, or in mediation.

Whilst this will resolve the issues regarding the marriage the Prudential have considered the effect of individuals who divorce compared to those who do not and generally speaking have found that those who divorce can lose an annual income upon retirement of approximately £2,100 in comparison to those who do not divorce.

Clare Moffat, who is a pension specialist for the Prudential has said:-

“Although the emotional impact of divorce may have long passed, it could come as a shock for people to find that it continues to impact them financially into their retirement. A pension fund is likely to be one of the largest and most complicated assets a couple will have to split in the event of a divorce.

“The support of a professional financial adviser or retirement specialist should help ensure that any financial decisions taken have the least possible impact on incomes available later in life. Professional advice is particularly important in the face of the recent changes to pensions legislation and divorced retirees acting on advice received under the previous rules may want to consider seeking updated advice on any post-retirement plans they have made.

“During a divorce the costs can quickly mount up, with legal fees, the cost of setting up a new home and the effect of splitting any existing retirement savings all potentially impacting the ability of those involved to continue saving into a pension. Unfortunately divorce is most likely among those aged 40-44, the period in many people’s lives when earning potential peaks and the most valuable pension contributions can be made.”

In summary the longer that you have been paying into a pension the more that you income could reduce upon your retirement, should you Divorce. Obviously there are also other factors which would need to be taken into consideration when considering a Pension Sharing Order including the length of the marriage, the earning capacity of both parties, the age of the children in the marriage, and all other assets that are included within the matrimonial pot, to name a few of the s25 factors.

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