Rise in divorcing couples obtaining a pension-sharing order

Upon divorce, more and more people are looking to share their pensions due to a lack of other assets being available and due to the average age of divorce couples rising. Furthermore, as older couples divorce, pension funds are increasingly likely to be the biggest source of wealth to be divided. The average age at divorce has risen by almost seven years in recent decades to reach 44.2 years old for men and 41.7 years old for women.

Sweet & Maxwell, the legal publisher reported that there has been an 11% rise in the number of pension-sharing orders made by the family courts in 2011. In total, more than one in ten of all divorce related financial settlements ordered by judges after spouses separate now includes an arrangement to divide up the main earner’s pension.

Experts say that the rise could be down to the recession which has seen the retirement fund of the main earner become a household’s biggest asset, with cash in short supply and houses worth a lot less than before. Furthermore, more couples are separating in their fifties when they are more likely to have built up a bigger pension making up the parties’ largest matrimonial asset. However, it does mean that one spouse could have a lot less money to live on in old age than they had been expecting.

This comes to light after official figures showed that the number of divorces inEnglandandWalesrose in 2010 for the first time in almost a decade, with commentators suggesting that this could be down to the recent recession putting marriages under greater strain.

Under the December 2000 law, spouses were for the first time entitled to half of the main earner’s occupational pension (not state pension) on divorce when courts divided their assets. In most cases, the pot is divided into two new funds at the time of the divorce in order to achieve a clean break.

Sweet & Maxwell say that the total number of ancillary relief cases (applications for financial orders) rose by 3% in 2010 to reach 82,290. Of these, 10,250 involved pension-sharing orders, up from 9,218 in 2009.

There was also a 5% rise in property adjustment orders, in which property and other non-cash assets are transferred from one partner to the other. By contrast, the number of orders relating to lump sums rose by just 1%.

Satvinder Sokhal