Divorcing Mothers Warned.....

Divorcing mothers warned to fight for a slice of their ex-husband's pension or face financial loss in later life 

Stay-at-home mothers should fight for a slice of their ex-husband’s pension when they split or risk financial strife in retirement, the pensions minister warned yesterday.

Steve Webb said there was not enough emphasis placed on valuable gold-plated pensions when couples negotiated their divorce settlement.

It means thousands of divorcees – but particularly women who have taken a career break at some point to care for children – face being reliant on the State pension in old age.

Divorced mothers have been warned to seek part of their ex-husband's pensions or face financial loss in later life, especially if they have taken time out from their career to rear children, photograph posed by models

Mr Webb said divorce lawyers should be ‘encouraged to always make sure this is properly part of the negotiations and is on the table’.

The Liberal Democrat MP said workplace pensions were often ‘an after-thought’, but urged people not to overlook its worth.

He said: ‘If you are part of a couple and you do not take out a pension for family reasons – whether that is caring for children or family in later life – and then you split up on the eve of retirement, there is a danger there.

‘It is tempting to think about your immediate needs such as the house and the kids, but it is very important we make sure that pension share issue is at the forefront.

‘There is a risk the pension becomes an after-thought and that people think ‘I will worry about that at retirement’. But a pension, and particularly if it is final salary, is very valuable and that future value is not always easy to grasp’.

Earlier in the day, he spoke on the issue at a conference hosted by the Resolution Foundation think tank, in which he said the impact of divorce on pension income was ‘one of the elephants in the room’.

Pensions Minister Steve Webb, pictured, said that pensions were often seen as 'an afterthought' in divorce

He said: ‘We have got a problem with divorce. Many people – women particularly – take career breaks or take time out to have kids and then go back in having missed out [on pension contributions].

‘If a couple stay together in retirement then, between them they are fine, but what if they split up in their fifties?’.

About four in 10 marriages in the UK now end in divorce, according to official figures.

Pensions are frequently people’s biggest asset in divorce after the family home and can be split or shared in several ways.

Court agreements can be obtained for ‘pension sharing’, which involves signing over a percentage share of the pension to the ex-partner.

Alternatively, people can offset the pension against other assets – for example, one may receive a bigger share of the family home in return for the other keeping their pension.

Others agree to receive a deferred lump sum when their partner retires.

Mr Webb said there were no ‘quick fixes’ for the problem, but called for an increased awareness among divorcees of the future value of pensions.

He said: ‘In theory we have pension sharing on divorce and pension splitting.

‘But the reality is that it doesn’t work terribly well. Your average divorce lawyer is focused on the house and, if you have still got kids, are you really going to haggle hard over a share of the pension?’.

Family lawyer Marilyn Stowe said the lower-earner was often given immediate capital, such as the house or a lump sum, while longer-term assets such as pensions were often ‘left in the hands of the other party’.

She said: ‘I agree that the long-term needs should never be ignored but circumstances tend to dictate an emphasis on immediate needs.’

Mrs Stowe said that law firms and courts would ‘never forget such a valuable asset’ in negotiations, but that couples who came to an informal agreement could make mistakes. She added: ‘With legal aid no longer available for divorce, lots of couples may think they cannot afford a lawyer and could overlook the value of pensions.’

Caroline Abrahams, of Age UK, said: ‘It’s important that everyone is encouraged to put money aside for later life.

‘Age UK believes older people should be offered periodic ‘financial MOTs’ so that they know how resilient they are financially. That includes understanding, if you are part of a couple, what happens to your pension when your partner dies or if your situation changes for other reasons.’ 

Source:- http://www.dailymail.co.uk/news/article-2950074/Divorcing-mothers-warned-fight-slice-ex-husband-s-pension-face-financial-loss-later-life.html