Care have to be taken to verify a shake-up to divorce guidelines doesn’t negatively influence ladies’s pension rights, based on a former pensions minister.
Divorced ladies can already be at excessive threat of poverty in retirement as a result of usually comparatively little consideration is given to monetary settlements which totally consider pension wealth, former Liberal Democrat pensions minister Sir Steve Webb mentioned.
Main adjustments to the regulation on divorce will come into pressure from April.
The Divorce, Dissolution and Separation Act 2020 reforms the authorized necessities and course of for divorce. The adjustments will cut back the potential for battle between divorcing {couples} and assist them keep away from the “blame sport”.
They are going to enable {couples} to finish their marriage collectively and take away the power to make allegations concerning the conduct of a partner.
One group presently at excessive threat of retirement poverty is divorced ladies. Largely it’s because comparatively little consideration is commonly given on the time of divorce to a monetary settlement which provides correct weight to pension wealth
Sir Steve Webb
A brand new on-line service for making use of for a divorce will probably be out there from April 6 2022.
A analysis paper authored by Sir Steve and household regulation barrister Rhys Taylor seemed on the new divorce regulation and its potential influence on the sharing of pensions in England and Wales.
It discovered the transfer to “no fault” divorce has been extensively welcomed and is designed to streamline the method, however there are issues that the brand new divorce regulation, coupled with the elevated transfer to a web-based course of might additional undermine the efficient sharing of pension wealth at divorce.
Divorcing spouses might underestimate the potential worth of pension wealth, for instance a salary-based pension revenue could also be price excess of the household dwelling.
{Couples} may additionally be extra targeted on different priorities akin to having someplace to stay and monetary safety and assist for youngsters.
Whereas these issues exist within the present system, the authors raised issues the brand new course of might make issues worse.
In some circumstances, a partner might obtain discover {that a} divorce software has been made just some months earlier than the court docket is requested to grant the primary divorce order and there could also be little they’ll do to cease or delay the method, they mentioned.
Individuals may additionally be reluctant to boost pension points for worry of being seen as obstructive in a brand new system designed to cut back battle, the authors argued.
The authors referred to as for shut scrutiny by the Ministry of Justice into whether or not attitudes and outcomes on pensions change because of the brand new divorce course of.
Sir Steve, who’s now a associate at LCP (Lane Clark and Peacock) mentioned: “One group presently at excessive threat of retirement poverty is divorced ladies.
“Largely it’s because comparatively little consideration is commonly given on the time of divorce to a monetary settlement which provides correct weight to pension wealth.
“It’s fully comprehensible that divorcing {couples} concentrate on different issues, however the threat is that folks merely don’t perceive the worth of pensions.
“Whereas there’s a lot to commend the brand new divorce regulation, it could be very unlucky if a by-product was that even fewer divorces had been accompanied by a good sharing of the couple’s total wealth, and specifically of pensions.”
Mr Taylor mentioned: “I very a lot welcome the brand new divorce regulation, however the household justice system must be astute to keep away from the regulation of unintended penalties.
“So usually pensions are the very last thing anybody actually desires to consider, particularly on divorce. Care must be taken to make sure that the honest distribution of pension wealth on divorce isn’t missed on this courageous new period.”
A Ministry of Justice spokesman mentioned: “This isn’t a brand new drawback and, in truth, our adjustments give {couples} extra time to resolve their points and larger probability of doing so amicably.
“We have now dedicated to additional exploring monetary provision, together with pension sharing, as soon as these adjustments are in pressure.”
