There’s a lot of advice available about how to look after your finances when getting divorced, but one topic that is raised less often than most is the so-called ‘pensions trap’.
This is when one partner has a private pension scheme that he has paid into throughout the marriage, which would normally benefit the other partner once they reach retirement.
Without taking this into account during divorce proceedings, the other partner can lose this entitlement without gaining any compensatory benefit, and this is what is commonly referred to as falling into the pension trap.
Research published by Age UK in late 2018 revealed that more than 70% of couples do not discuss private pensions at all ahead of their divorce.
Yet many have shared or common finances, including joint bank accounts, and these accounts may in turn be used to pay into a pension pot solely in one partner’s name.
In focus groups, Age UK met several individuals who had paid into their partner’s pension in this way, but had never realised, or been advised, that they could reasonably claim some of that money back during divorce.
The pensions trap is just one example of how protecting finances during divorce goes further than is often realised – it’s not just a case of splitting the money you have in the bank.
Divorce itself can be a costly process if you can’t keep things amicable, and this is why mediators work hard to ensure both parties’ voices are equally heard, and to resolve any impasses to make prompt progress without running up additional costs.
Ultimately this leaves both parties with more of your finances so that however you agree to divide it up, you receive the vast majority of your money overall instead of watching it get eaten up by solicitors’ divorce fees and court costs.
At Marcia Mediation we believe in divorcing with dignity – that means giving both parties a fresh new start, sustaining an enjoyable lifestyle with healthy finances as far as possible, and ideally keeping things amicable so there is no awkwardness between you in future.
Nobody should feel trapped in an unhappy marriage purely due to financial concerns, but with the help of an experienced mediator it can be possible to separate at much lower cost, potentially making divorce a more realistic prospect for some couples, and a cheaper process for all.
If you have any questions, call us on 0161 425 3940 or fill out this form
