Importance of pensions in high-asset divorce – Mediation Wallasey

Private pension pots in high net worth divorces may be worth more than double the couple’s disposable income and 50 percent more than their property assets, according to data released earlier this year.

In Mediation Wallasey analysis of data from the Office for National Statistics (ONS), the experts at financial planning firm Succession Wealth classified the money and assets owned by divorcing spouses into the following four categories:

  • financial
  • property
  • physical
  • private pension wealth.

According to the Mediation Wallasey findings of the study, private pensions make up the greatest portion of the estate for couples whose combined wealth is greater than one million pounds. On average, each couple’s private pensions are estimated to be worth more than 1.5 million pounds.

This is in comparison to a little more than one million pounds in real wealth, 700,000 pounds in financial wealth, and an additional 186,000 pounds in other physical assets.

It is important to remember that pension pots should not be forgotten when negotiating a divorce settlement, especially in couples where one partner may have substantial private or workplace pension savings while the other partner has little to no savings at all. This is especially true in situations where one partner may have substantial savings but the other partner may have none at all.

A Mediation Wallasey mediator can assist you in negotiating a fair share of one-sided pension pots to ensure that neither party is put at a considerable disadvantage once you both reach retirement age.

What role do pensions play in the divorce process?

A divorce settlement is a means to ensure that both parties may look forward to a fair and comparable standard of living in the future and that nobody will be forced into financial hardship as a result of the divorce.

In the short term, this can be accomplished by separating the family’s funds and assets. For example, one party can buy out the other’s half of the family house, while the other party moves out and either rents or purchases a second residence.

However, upon reaching retirement age, many formerly married people discover that they were unable to negotiate a portion of their former spouse’s pension and, as a result, have a significantly reduced income during their golden years.

When pensions are taken into account throughout the divorce process, it is possible to work out an agreement that will guarantee that both parties will continue to have a standard of living after retirement that is on par with what they were accustomed to during their working years.

Age UK has been running a campaign on this issue throughout 2019, and despite the fact that the last-minute general election has temporarily halted the progress of no-fault divorce legislation, awareness of pensions in divorce proceedings is one of the year’s trends that is likely to continue regardless of the outcome of the election.

This is a critical problem for any divorcing couple with a considerable imbalance in pension funds, and it is especially relevant for couples separating later in life when retirement income is likely to be relied on within the next few years.

Please call 01138 921 022 if you have any questions.

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