Divorce in later life

Road-separation

A recent census by the Office for National Statistics (ONS) found that 9% of people in the over 65 age bracket had divorced by 2011. Ten years earlier, this figure was 4.5%.

The ONS report suggests that divorce in later life is now more frequent. This may reflect an increase in life expectancy and better health. Certainly, it is our experience that as people expect to live longer and to remain fitter, they appear to be less willing to stay in a relationship in which they are unhappy.

However, divorcing in or as retirement approaches adds additional challenges. With far reaching State Pension reforms due to take effect in April 2017, millions of people will be affected and the risk is that they may, in the event of divorce, be worse off than expected.

Importantly, for those who divorce later in life, the changes will have a substantial impact upon the rights of those who may have been out of the work market for many years looking after their family. At present, a divorcee who hasn’t made sufficient National Insurance contributions to qualify for a full State Pension is entitled, on divorce, to rely upon their former spouse’s contributions to enhance their pension entitlement. This is called pension substitution. Furthermore, at present, a spouse is entitled to share their former spouse’s Additional State Pension benefits. Both rights are to be brought to an end.

These changes are of particular importance for those who plan to divorce, or think they may wish to do so at some time in the near future, particularly if their marriage has been long, either partner is approaching retirement age, or one partner gave up a career or took a long break to look after the family. Arguably, those who fall into these categories, and who think their marriage may not survive the course, may be better to act sooner rather than later in order to take advantage of pension substitution and the right to make claims against Additional State Pension entitlement.

At whatever age couples divorce, a Court has the power to regulate what should happen to both parties’ financial assets including, importantly, pension benefits. The options open to both the Court and to the parties will be less wide reaching when the single tier pension scheme comes into effect. This means that it is essential for anyone facing the prospect of a divorce obtains expert advice about the implications of the forthcoming pension changes now. Those who fail to obtain such advice do so at their peril.

If you would like to discuss any of the issues raised above or discuss your situation generally, please contact a member of our Family team.

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