Pension poverty is a real risk after divorce

A recent report by insurance company Aviva has shone a light on how pensions are seen and treated on divorce. Their findings highlight how important it is for divorcing couples to seek advice on how their pensions will be taken into account in their financial negotiations and the ultimate financial settlement. The agreement reached will affect not only the couple in the short term, but potentially decades into the future as they reach retirement.

When dealing with finances on divorce, the starting point is an equal division of all the assets within the matrimonial pot. There are then arguments to be had over moving away from this 50-50 split, for example because one of the parties needs more of the assets to re-house. Importantly, the matrimonial pot always includes the couple’s pensions.

Alarmingly, Aviva’s report reveals that: 

  • 15% of divorced people did not realise that their pension could be impacted on divorce;
  • 34% of divorced people made no claim on their ex-partner’s pension during the divorce;
  • 9% say that they will be (or are) significantly worse off in retirement as a result of divorce; and
  • 12% of those surveyed cut back or cancelled their pension contributions.

Pensions can form a significant part of the household wealth (they are often the most valuable asset after the family home) and are a key aspect of financial negotiations and settlement on divorce. These statistics raise serious concerns about whether divorcing couples are fully aware of the options available to them in respect of pensions, and how this might impact them later in life.

Dealing with pensions can be complex and there is a lot to consider. Not only are there different types of pensions (defined contribution, defined benefit and SIPPs to name a few), couples will have made varying contributions to their pensions at varying times in their life, some pensions will offer lump sum draw downs and others will offer spousal benefits. These are just a few aspects that need to be considered. There may be an added complication if a pension is abroad or the policyholder lives in another country.

Within our team we have lawyers who are recognised nationally and internationally for their experience in dealing with pensions on divorce.  With many years of experience advising clients, no matter how novel or complicated your issue is it is very likely we have considered it before and we will know how to solve it. 

If you would like further advice on how pensions are dealt with on divorce, contact our team who would be happy to assist you.

Posted by


Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.