It has recently been reported in the national media that there was a dramatic drop in the number of pension sharing orders made by the courts last year: 10,500, down from 15,000 in 2019, and the lowest number in ten years.
There may be a number of reasons why the figure was so low last year.
Some of these reasons may be of no great concern, such as the temporary effect of the pandemic reducing the number of cases dealt with by the courts, more wives having their own pensions and not needing a share of their spouse’s pension, and increased house prices resulting in more people taking a greater share of the matrimonial home, rather than of their spouse’s pension (although there have also been significant recent increases in the values of pensions).
But there could be a more worrying reason: that more people are doing their own divorce without a lawyer to advise them upon their entitlement to a share of their spouse’s pension, thereby missing out upon an extremely valuable and important asset.
Just to recap for the benefit of those who don’t know, a pension sharing order is an order transferring all or part of one spouse’s pension into a pension belonging to the other spouse. A common arrangement is for pensions to be ‘equalised’ between the spouses, so that each spouse ends up with a similar pension entitlement.
The importance of pension sharing on divorce comes into focus when one realises that pensions are often the second most valuable asset on divorce, with only the former matrimonial home being worth more. And it is still often the case that one spouse, usually the husband, has far greater pension provision than the other, leaving the other spouse at risk of having to manage with far less income in retirement.
It is therefore essential that anyone going through divorce is advised as to their entitlement regarding pensions. Obviously, such advice comes at a cost, but that cost could easily be outweighed by the value of a pension share.
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