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Are pension reforms behind an increase in "Silver Separators"

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In England and Wales, divorce was in decline between 2005 and 2015. The most recent 10 years of data available from the ONS showed a 28% fall in the number of divorces in that decade. However, older people were seen to be bucking the trend. In the same period, the number of men divorcing aged 65 and over went up by 23% and the number of women of the same age divorcing increased by 38%.

In my experience a significant reason why we have seen a rise in those in their middle-age and beyond separating is the way in which a couple’s pension pot can be dealt with when they divorce. Since the end of 2000 the Family Court has been able to make a pension sharing order (PSO) i.e. an order that funds from one spouse's pension pot are transferred to the other's pension pot as part of its extensive powers to divide and redistribute a couple's assets when they divorce. Previously a spouse (usually the wife)  who may not have worked or may have had a career break which would have affected her pension (if she had one), had to wait until the pension was in payment before anything could be done with it. Even then the order that the court could make would come to an end on the death of the pension holder. A pension sharing order survives beyond death.

Also the new pension freedom rules, which were announced in the March 2014 Budget, and mean that over-55s are able to access their pensions pots without purchasing an annuity, are likely to have had an impact, because assets that were previously ‘locked away’ may now be available.

The Family Court has for some time now made it clear that in the case of long marriages, which tends to be the case when dealing with a middle-aged couple and a first marriage, the assumption is that the assets will be split equally rather than an order being made on the basis of, often but not always the wife's, reasonable needs. So where a significant asset pot has been built up, the wife can expect to share equally in that rather than getting only what a court considers she reasonably needs. On the other hand, many over 50s are in second or subsequent marriages, which are statistically more likely to fail.

Also, by the time people reach middle age, their children will often have finished their education and hopefully flown the nest and many are left wondering if there’s more to life, or have invested so heavily in their children emotionally that their relationship with their spouse has been neglected.

The financial aspects of cases where there are significant pension assets and probably a mortgage free property may be considered to be easier to deal with than cases where assets are limited or there are still minor children. The reality is though that where a couple's working life may be drawing to a close and the ability to generate future capital is diminishing careful thought and expert advice is needed to ensure that benefits built up in the anticipation of a good retirement are not lost. The particular rules relating to certain pensions, for example the Armed Forces Pension Schemes, and the differing way members and their spouses may be treated,eg. the age at which they can receive their pension, can require some creative thinking too.

Whatever your age or circumstances, when facing divorce or separation it’s always advisable to seek the advice and assistance of a  specialist family lawyer who can guide you through these and many other complex issues.

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