In Focus: Advice for Women  

What's best on divorce: the pension or the property?

  • To understand why a couple might divide assets in a certain way.
  • To be able to explain the necessity of proper pension advice.
  • To be confident in recommending that solicitors discuss pensions values with clients.
CPD
Approx.30min

Certainly, high-level, cross-party support for fairer outcomes, together with an industry galvanised to ensure better financial outcomes for women on divorce, would go a long way towards solving the issue. 

However, this is only a small step forward, Price thinks. There have also been calls for an automatic pension division on divorce, she adds.

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Would this be the best solution - automatic house and pension splitting so everything is equitable for both partners?

Price does not see this working. "Automatic pension division on divorce is a solution the legal profession and judiciary would never accept, as it would take the discretion away from judges.

"English law works on the discretionary court system. Even default positions are not popular with the English courts." So the way in which the judiciary operates can, in this instance, work against a practical solution to the perennial pension gap problem.

And it can cost thousands to get a pension sharing order - which of course takes its time to work its way through the courts. But Price says that, from her perspective, at the very least both parties should know what the pension is worth.

"It is a massive thing to split a pension in half and you cannot do it without a court order. You have to register with the court and see a judge and get lawyers in. These costs could go into the thousands of pounds. And then if you need an adviser to get the pension valued properly, this is an additional cost."

So is the expense itself acting against women? Price says: "The cost of getting pension valued is viewed as prohibitive but even when solicitors do tell the client it would benefit her in spades, often the client is unwilling to pay so much."

Forward-thinking is needed

There are some actuarial firms trialling an off-the-peg, cheaper valuation for standard cases, such as Mathieson Consulting, which has a specialism in pensions and divorce. However, there is still too little innovation that helps women at the point of asset sharing. 

Price also warns solicitors to do their duty and "mention the pension", at the very least. She points to Grant Lazarus, family barrister at Liverpool-based Harrington Street Chambers, who specialises in helping women whose divorce lawyers glossed over the pensions problem. 

She says: "Even if solicitors get clients to sign a waiver saying they are not interested in the pension, these might not be worth the paper they are written on."

This is again where financial advisers can step up and help clients by putting the pension at the forefront of conversations.

Woolgar urges women to: "Seek legal and financial advice to know how you can financially protect yourself and avoid unwanted surprises further down the line."