PLSA UPDATES PENSION SHARING ON DIVORCE GUIDANCE
18 September 2023
Pension sharing is one of the options available following a divorce or the dissolution of a civil partnership. It ensures both parties’ futures are provided for and is especially relevant in situations where one partner has built up significantly more pension savings than the other, usually because one was the major breadwinner and the other took on more family caring responsibilities.
Research by the University of Manchester found in about half of couples with pensions, one partner has 90% of the pension wealth. Fewer than 15% of couples have pensions that are approximately equal. These disparities vary little across the income and wealth distributions.
However, an estimated 71% of divorcing couples overlook pension sharing, despite private pension wealth often being one of their largest assets, and in most cases, it is the woman who loses this wealth.
It is important that each individual consider their pension wealth upon divorce, and private sector occupational schemes play a key role in relaying information on these assets.
As women are often the ones losing out, consideration of these assets also supports the PLSA’s efforts to ensure an adequate retirement income for all, including for typically under pensioned groups.
The newly released guidance is designed to support private sector occupational pension schemes when providing information to scheme members on Pension Sharing Orders (court orders that help couples divide their pension funds upon divorce).
The guidance includes a recommended range for schemes to charge members, as well as a flowchart outlining the circumstances when charges can be made. The guidance is meant to be used as a guide only, and charges may vary contingent on the specific circumstances of each member.
The new guidance will apply from Tuesday, 2 January 2024, the first working day of the new year and National Divorce Day.
The Pensions Sharing on Divorce Guidance can be downloaded from the PLSA website.
More information about pension sharing is available from MoneyHelper, the Government-backed and impartial financial guidance service.
Joe Dabrowski, Deputy Director - Policy, PLSA, said: “Understandably, working out how to split pension assets is not the first priority for most separating couples. But it is really important to make sure both parties are provided for in retirement, especially when one party has been the primary earner and built up a pension, while the other – usually because they have taken on more family caring responsibilities – has not.
“It most cases, it is women who have less pension wealth. On average, women retire with about two thirds of the pension savings of men. Pension sharing is designed to help address this imbalance when couples decide to go their separate ways.
“Our Pension Sharing on Divorce Guidance is one of our most downloaded tools and an important resource to help carry out Pension Sharing Orders fairly and consistently.”
Mark Smith, Head of Media Relations
020 7601 1726 | [email protected]
Cali Sullivan, PR Manager
020 7601 1761 | [email protected]