A leading insurer who has analysed the divorce market recently said that divorcees can expect just under £4k less per year than before. In fact there is even a growing percentage of people who will have no pension savings at all after divorce, and that is very worrying.
Divorcing couples may have concentrated on building up their joint retirement income at one stage, only for this to be cast aside when splitting things up. Any such splits would then possibly be used for essential items like heating, electricity, food and clothing and so any retirement savings have no chance of survival.
MAP as a company has always said the best way to plan pensions is to do as much 50/50 between husband and wife; this in itself would help people a lot more. It is far better if a couple go into retirement with roughly equal pension pots, as this reduces taxation. This same outlook would also help any divorcing couples as well, as they would each have their own pot to use. There would still be additional expenditure of course because you would have two houses to be paid for whereas before it would only have been one, but at least each party would have their own pension pot to utilise. Something is better than nothing!
Divorces can also cause other problems later on in life as well, especially where someone remarries or enters into a new relationship, and forgets to do a new beneficiary for a pension. There are quite a number of people who forget about this until it is too late. And of course after death, nothing can be done.
It is reckoned that people can have up to 11 different jobs over their lifetime and needless to say they can have as many pensions, which are then difficult to keep track of and monitor. Bear in mind that trustees of pension schemes can only allocate pensions according to the written wishes of a member, and if that member forgets to update things, money could end up in the wrong place altogether.
This is where advisers can come in and tidy things up for clients, because IFAs can consolidate a client’s pensions, but only if it is in their best interests to do so, thus keep things tight and manageable. MAP do this for a number of clients but we also monitor what funds are used in any investments, to try and maximise returns and therefore help the retiree.
If you would like to find out how Money Advice & Planning can assist with divorce settlements for any clients, please visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call your local MAP adviser at a time which suits you.
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