Research1 suggests that nearly one in five people are, or will be, financially worse off due to their divorce, and that many divorcees struggle to make ends meet after separating from their partner.
The statistics make for worrying reading. A third of divorced respondents said they were forced to take money from their savings to supplement their finances, 20% had to use credit cards for everyday expenses, 18% borrowed from family and friends, while 15% resorted to selling their possessions to make ends meet.
Pensions are an asset
Pensions can be highly valuable assets – 42% (or £6.4tn) of UK wealth is currently held in private pensions – meaning that a pension can be a hugely important part of a divorce settlement. And yet, 15% of divorced people had no idea that their pension could be impacted by getting divorced, while 35% did not make any claim on their former spouse’s pension.
Don’t underestimate your pension
Alistair McQueen, Head of Savings & Retirement at Aviva, commented, “It’s critical that, as part of the separation process, couples take time to think about and discuss one of their single most valuable assets, their pension […] It can often be a very complex issue so, as well as hiring a family lawyer, it would be advisable for couples to contact a financial adviser to walk them through the pension valuation and financial process.”
The impact of ‘no-fault’ divorce
It has yet to be understood how the introduction of so-called ‘no-fault’ divorce in April this year might be starting to impact the way in which pensions and other assets are treated in divorce settlements. We would always recommend speaking with a qualified financial adviser for guidance relating to the financial aspects of your divorce.
We are here to help you make some important decisions with your finances as you navigate the complexities (emotional and financial) of divorce.
1Aviva, 2022