A new pensions underclass is evolving as many divorcees are not taking advantage of the new pensions...
A new pensions underclass is evolving as many divorcees are not taking advantage of the new pensions splitting legislation introduced in December 2000, Inter-Alliance says.
Figures from the Lord Chancellor's department show that less than 1% of the 300,000 married couples that have filed for divorce since the new rules came into force have benefited from the regulations.
Apart from the family home, pensions can be the biggest asset in a divorce, Inter-Alliance says.
But if pensions are not taken into an account in a settlement, it could lead to a "pensions underclass" of divorced people who will be left without an adequate pension pot.
"After the matrimonial home, pensions are frequently the biggest asset in a divorce settlement," says Nevin Weakley head of professional alliance at Inter-Alliance.
"The figures showing how infrequently pensions are split are a major cause for concern and demonstrate the need for more interaction between matrimonial solicitors, actuaries and IFAs."
This could further undermine the already existing pension problem, especially as people are living longer and are not saving enough for their pensions, Weakely adds.
On top of which, women are the ones most likely to suffer from the loss of pension benefits, because they are more likely to have taken time out from working to raise any children and therefore have lower contributions.
Pension splitting according to the Welfare Reform and Pensions Act 1999 came into force in December 2000, and permited a divorcee to receive a proportion of their spouse's pension and to receive benefits completely independent of him or her.
Four years before that, "earmarking" was introduced, which allowed a divorcee a proportion of their other half's pensions on the conditions they had to wait for their spouse to take their pension, meaning benefits could vary from year to year.
Three funds to watch
Adviser tech review