Are pensions overlooked in no-fault divorce? - Marcia Mediation

Divorce is commonly regarded as one of the most stressful experiences a person can experience as an adult. While it can be a lengthy and arduous process, you can soften its impact by trying to divorce amicably. An amicable divorce is more likely to b...

No-Fault Divorce was enacted on April 6th 2022 as part of the Divorce Dissolution and Separation Act 2020. It removes the need to prove that one party has committed a fault in order for a divorce to be granted.

Under the old rules, there were only certain circumstances under which a divorce would be approved by the courts: adultery, long-term separation, desertion and irreconcilable differences.

Now it’s no longer necessary to lay the blame on one spouse only – or on either spouse at all – making it much easier, faster and more amicable for couples to divorce (or to dissolve a civil partnership) in relationships which have broken down without fault.

In principle, this is good news. Britons are no longer trapped in loveless partnerships, divorces can be granted without a needless “blame game”, and partners don’t face the additional stress of taking blame for acts they have not committed.

No-fault divorce and pensions

For all its advantages, however, No Fault Divorce still requires the careful handling of any separation. One potential pitfall to be aware of comes in the financial settlement. Amicable divorce should not mean that you fail to protect your interests for the future, especially if one party has significantly greater private pensions savings, such as a workplace pension.

In July, Canada Life UK published Freedom of Information data that showed online divorce petitions have spiked 278% since May 2018, to a total of more than 207,000 in that period.

Figures are not yet available to show the immediate impact of the no-fault divorce law – those are likely to come in the 2022 full-year ONS report in February 2023 – but it’s likely that many more couples this year have opted to ‘go it alone’.

While this is reasonable in the most amicable of cases, it’s still worth consulting a financial mediator, to make sure that all parties are aware of what you are entitled to.

Why are pensions overlooked?

Canada Life’s technical director Andrew Tully said: “Adding pensions into the divorce mix can be daunting, but not dealing with pensions can be a huge mistake.

“People often avoid or overlook pensions because they can seem complicated. Where there is no solicitor involved, many people, especially women, opt to try to keep the family home without understanding the real value of the share of the pension they have given up.

“Add in the fact that pensions are difficult to value and difficult to divide, and we have a complex situation.”

Making pensions part of the conversation

September 12th-16th was Pension Awareness Week, and Mr Tully’s comments echo those made by Smart Divorce founder Tamsin Caine in her guest blog we featured in 2020.

Two years later, many separating couples are still not talking about pensions – and no-fault divorce, while generally a very good step forwards, means more couples might choose to overlook the fine details when separating the family finances and assets.

Finance mediators can help, by offering independent guidance on some of the issues you may have missed, without judgment and without taking sides.

If you have a financial advisor or pensions advisor, they can be included in your mediation, so you can get a professional second opinion before making any final decisions.

To find out more about how financial mediation can help you split household finances and assets during divorce, contact Marcia Mediation today for an initial consultation.

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