Some related articles :
Don't Settle for Anything Less
could be a couple's most valuable matrimonial asset, in some cases worth
more than the equity in the family home. Yet although legislation now
allows divorcing women to apply for a share of their husband's pension
pot, a survey conducted by the Solicitors' Family Law Association (SFLA)
reveals that few consider pension sharing a priority when negotiating
found that clients were often unaware of the new provisions, dismissed
pension sharing as too complicated or adversarial, or took a short-term
view driven by immediate needs such as housing, cash income, child support
or a car. These findings are reinforced by recently announced figures
showing courts have made very few pension sharing orders since the
introduction of the new legislation. The low take-up is even more
surprising, given that women are less likely than men to have a personal
pension or belong to an occupational pension scheme.
they represent well over two thirds of over-60s dependent on income
In part, this
is because many women interrupt their careers to raise families, or give
up work to provide a home for the breadwinner - the very injustice the new
pension sharing scheme was designed to redress.
Yet a recent
parliamentary answer revealed that only 367 pension sharing court orders
have been made since the law changed last year.
Steve Webb MP, a professor of social policy and Liberal Democrat spokesman
on work and pensions. "For generations, married women have been the
poor relations when it comes to pensions," he says. "High
divorce rates mean they look set to remain the poorest pensioners in
future. If the government is serious about preventing pensioner poverty,
it should examine the reasons for the failure of pension splitting."
But has it
failed? Many finance and legal professionals believe it is too early to
tell. "Admittedly, it's been a steep learning curve," says Karen
Wright of specialist financial advisors Options For Women. "We often
find our clients' solicitors seeking guidance from us and even some
pension managers seem unclear on the new law."
points out that pension sharing is not appropriate in all cases, and that
negotiating a fair split can be a lengthy process. "We have dealt
with several cases where resolving pension issues has stretched out over
many months," she says, "but the long-term gains can be very
Susan Deas, a
barrister practising family law, agrees the professions are still feeling
their way. "It's taking a while for advocates and, indeed, judges to
adjust from long-established practice.
is still a mindset in some quarters which says the woman gets the home,
while the man hangs on to his pension. Nonetheless, I believe we will be
seeing many more pension sharing orders in future. In disputed cases,
lawyers will need to work closely with clients' financial advisers, and
also be more aware of actuarial factors - a woman's longer life expectancy
means she needs a larger fund than a man to receive the same pension, for
are also cautiously optimistic. "Compared with the initial excitement
in the media, uptake of pension sharing may appear slow," said an
SFLA spokesman. "But the first cases were, effectively, pilots. Now a
growing number of our members are specialising in this area."
is a family law solicitor and former chair of SFLA. He gave evidence to a
House of Commons committee on pensions and divorce and feels expectations
were raised unduly.
government initially claimed there could be as many as 50,000 pension
sharing orders each year," he says. "But the legal profession
always felt this was wildly optimistic."
Mr Sax points
out that pension sharing can be a complex matter. "Clients need to
understand the importance of a pension, and balance that against more
immediate needs such as the home or child support. They have to ascertain
the pension's value and compare it with the other assets, considering,
too, the likely expenses of pension sharing - for example, the cost of
getting information from fund trustees, pension transfer charges, fees to
independent financial advisors, and so on."
sound advice is the key requirement," Mr Sax says. "I think all
the professions involved - lawyers, judges, IFAs and pension specialists -
should be specifically trained in sharing issues and should work
collaboratively. Luckily, that is increasingly the case, so divorcing
couples- who might previously have foregone valuable benefits - need no
longer lose out."
in the law that proved a financial lifeline
sharing has proved an absolute lifeline," says Patricia Sherratt, 54,
who divorced this April after 31 years of marriage. "Without it, I'd
have nothing to live on."
family home was sold on divorce and they both bought smaller properties.
Initially, Mrs Sherratt lived on money she had inherited but with that
gone, she had no other income to look forward to.
I'm a trained cartographer, I spent most of my married life at home
raising our two children.
ex-husband was in the ferry business; he recently retired as a senior
manager having built up a substantial final-salary occupational pension.
the law changed, women in my position were dependent upon their
ex-husbands for maintenance payments - when the man died, the woman's
income died with him. Now, women have the independence of their own
several financial advisers and chose one called Options For Women because
they knew about pension splitting and could instruct my solicitor."
spent my life raising our family, I'm entitled to my share of the pension.
It's now my sole income. However, although my ex-husband has been able to
draw his half of the pension without cost, I've had to pay for financial
advice and management, and for transferring and re-investing my share.
aside, woman facing divorce should understand how important pension
sharing can be."
couples (but not co-habitants) may apply for a pension sharing order if
they petitioned for divorce on or after December 1, 2001.
regulations apply throughout the UK and cover Serps, stakeholder pensions,
occupational pensions, and personal plans. The legislation enables courts
to order part of the pension of one spouse to be transferred to the other
as part of a divorce settlement. The recipient gains an asset in their own
right (thereby ensuring they do not have to start saving for their
retirement from scratch after many years of marriage) and, unlike the
established option of 'earmarking' pensions, a clean break is possible.
sharing is not obligatory and when dividing assets judges will take
account of factors such as age, current and anticipated assets, childcare,
earning capacity and standard of living.
Family Law Association, www.sfla.co.uk
Association of Citizens Advice Bureaux, www.nacab.org.uk
Advisory Service, www.opas.org.uk
Financial Awareness, www.sofausa.org/
Women, 01227 722933
sharing is most appropriate where:
has an occupational pension and younger-than-average retirement age (such
as police officers, aircrew, firefighters and soldiers);
substantial assets are the home and the pension;
has no pension of their own but the other has a substantial fund; or
has lasted a reasonable length of time.
opting for pension sharing you should:
information about the pension(s) held by your spouse;
solicitor with pension sharing expertise (SFLA has an accreditation
independent financial adviser specializing in pensions;
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