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16 April 2015

The Long-Term Costs of Divorce

For divorcing couples, the cost is not just emotional, it can be a financial loss too.

The Prudential has recently conducted research which backs up the theory that divorce has a long-lasting financial impact.  The Prudential has found that for those who have been through a marital breakdown, they can expect to be £2,100 a year poorer in retirement than those who have not gone through a separation.

Clare Moffat, Pension Specialist at Prudential, said: “Although the emotional impact of divorce may have long passed, it could come as a shock for people to find that it continues to impact them financially into their retirement.”

Amanda Owens, family solicitor at Steeles Law, comments:

“It is a known fact that couples are worse off following divorce than those that stay together.  When going through a divorce, this invariably involves the breaking up of the family home and the associated costs of that, together with the costs of setting up a new home, which can have long lasting financial consequences for both parties.  Pensions are also regarded as a matrimonial asset and so are often shared upon divorce.  This means that each party is going to come away with a smaller pension pot than they had before the separation.  It is invariably the case that the pensions that have been shared will not recover because they are then so much smaller and as a consequence, this means that the income on retirement will be much smaller.

It is absolutely vital when going through divorce to make sure that pensions are considered and are properly looked at to make sure they are shared fairly between the parties.  There are different types of pension schemes, with some being much better than others, for example: A police pension or local government pension scheme is much more valuable than a private, non-contributory scheme.  Whilst we cannot protect our clients from the negative impact of the financial consequences of a divorce, we can at least help them recover what they are entitled to and minimise, as much as possible, the reduction in their long-term pension.”

For further information, please contact Amanda Owens or another member of the family team at Steeles Law.