Pension Sharing Orders soar 17% in a year
The number of applications for pension sharing orders has jumped 17% in the past year from 7,500 to 8,800 as pensions become increasingly contested in UK divorces, analysis by a Financial Planning firm has revealed.
Pension Sharing Orders are increasingly used to split pension investments between divorcing couples.
According to Financial Planner and wealth manager Bowmore Wealth Group, the increasing value of pension pots over the past decade, due to global stock market growth, has given them added value in divorce settlements.
Bowmore says pensions have become “increasingly central to divorce proceedings.”
Bowmore Wealth Group is an independently owned business based in London and Bristol, specialising in Financial Planning and investment management. The group includes a Chartered Financial Planner firm and discretionary asset manager Bowmore Asset Management.
It analysed data provided by the Ministry of Justice, comparing 2020/21 to 2019/20.
Jill Ellicott, a Financial Planner at Bowmore Financial Planning and a member of family justice professional group Resolution, said the question of divorce assets was moving away from a simple question of: “who gets the house?”
However, she added that while there were increasing wrangles about splitting pensions too many divorcing couples went through the courts to sort out pension splitting but this was an expensive route and she said a Financial Planner could be a power ally and provide a lower cost alternative.
She said: “You can spend tens of thousands arguing it through the courts, but the more cost-effective option is to understand what assets you each have and how they can best be split. There are less stressful means by which a settlement may be reached than a long, protracted litigation in court”.
“With the incredible value of modern pensions, it is no wonder that many going through divorces are looking to ‘have their day in court’ to settle how they are split. All that angst isn’t any good for anyone, not least, if children are involved and you’re not guaranteed a better outcome.”
The news comes as 'no-fault’ divorce legislation is enacted on Wednesday (6 April). The Divorce, Dissolution and Separation Act 2020 will mean that married couples can divorce without assigning blame. Until now couples had to have been separated for at least two years, or have proof of their partner being at fault.
Helen Bowns, partner and head of the family team at law firm Shakespeare Martineau, said: “England and Wales have been a step behind many other countries when it comes to divorce, clinging to tradition rather than opting for a more progressive approach. 6 April marks an important turning point, enabling couples to separate without playing the blame game.”
Couples will also be able to apply for divorce jointly. At present, one spouse must issue divorce proceedings against the other, potentially creating unnecessary animosity, she said.
• Editor's Note: Story updated to add information about 'no fault' divorce legislation.