Divorce costs £3,800 a year in retirement income
21st March 2018
An annual study by Prudential Financial has shown that the expected annual income for divorcees retiring in 2018 is £17,600 compared to £21,400 for those who have never been divorced - in other words divorce can have a significant impact on pension saving. Prudential suggests the research highlights the importance of divorced couples continuing to pay into their pensions even after a pension share on divorce has been implemented, in an effort to regain a strong an independent financial future for themselves.
Although we don’t have ‘pension sharing’ orders in Jersey, the fact that a party has a pension can be taken into account when dividing other assets, allowing such pension assets to be off-set (Brownbill v Southern 1999 JLR 94 and S v V 1999 JLR N9).
This means, where a spouse has stayed at home for many years raising children, and as such not been able to build a pension of her own, her contributions to the marriage are still regarded on an equal footing to the contributions of the earning spouse; which may include rights to the value of any pensions that have been built up during the marriage. This said Coleridge J in RP v RP ‘is not largesse by the husband, it is her entitlement deriving from her valuable contribution.’
Although in Jersey the ‘pension-split’ is often included in a ‘clean-break’ settlement, and awarded in a lump sum, careful financial planning for the future- post-divorce, is advice worth heeding. What to do with a clean-break settlement should be carefully considered.« Back to Blog