Experts, who needs them? A Family solicitor's view on pensions, divorce and experts
“People in this country have had enough of experts” – this was the comment reportedly made by Michael Gove, MP in June of last year.
Unfortunately, couples taking this approach when going through a marital break-up do so at their emotional and financial peril.
There is no substitute for using experts in family law, specialists in that field, offering clients tailored and pragmatic advice from a vast wealth of experience over many years of practice. Such experience should be adapted and expanded upon to take account of the need for alternatives to the traditional (usually unsatisfactory) court process to be available to couples, hence solicitors and barristers training in progressive areas of family law and practice such as mediation and collaborative law.
As family law specialists, we also recognise those stages and areas in a breakdown process where we need to bring in other experts – for example, family consultants to help clients cope with the emotional highs and lows which are an inevitable part of the process.
When thinking about how the financial picture might look when a couple separate, the immediate human needs of a home and enough money to live on, are likely to be uppermost in their list of concerns.
While, sadly, many couples are separating even in their twilight years, for many less “senior couples”, the financial set up in retirement may be lower down in their separation “to do” list.
Even in today’s world of equal opportunities, it does appear that women going through a separation may be looking at a bleaker retirement than men. The recent Scottish Widows’ 2017 Annual Women and Retirement Report highlighted some quite stark statistics concerning the relatively low level of importance placed in pensions when going through a divorce and also that women can lose out on a fair share of the pension assets.
For more than 20 years, the divorce court has been able to arrange for pensions in the hands of one spouse to be transferred to the other on divorce by ordering a “pension share” (therefore taking place there and then rather than dividing pensions when the couples retire perhaps many years later).
According to statistics in the report, the court is doing this in only 11% of divorces, with couples being more concerned about arrangements for their beloved pet (13%) than seeking a fair share of the other’s pension (9%). Only 22% of women said that they would bring up the question of pensions as part of their divorce.
Let’s say that people treated houses in the same way, this would be the equivalent of less than a quarter of spouses seeking a share of the other’s property.
Costs and complexity may come into it, but this may be a false economy given the pitfalls that can result from a lack of the input of a professional. Family lawyers recognise that clients need specialist advice not only on what would be a fair division of the couples’ pensions but also how best to maximise the values by using one pension fund over another. There are actuaries (specialist number crunchers) who are recognised by the courts as experts in this area. The couple usually agree to ask one actuary together (therefore sharing the cost), to prepare a report setting out suitable options for pensions division (or cash substitutes) and then they go off to see their own pension advisors to discuss what options would be best for that person.
There have unfortunately been examples of divorce cases where significant pension decisions have been taken by the parties, their lawyers and the court, which, in all probability, would have been different had the comprehensive advice of a pensions expert been obtained. Finances are inevitably strained during a divorce, but this should not mean that such an important asset as a pension should be glossed over in the divorce process.
Whether or not Mr Gove’s reported claim reflects a widely held belief, there is expert help at hand for you during the marital breakdown.
This is not legal advice; it is intended to provide information of general interest about current legal issues.