by Kevin Double
Pension reforms that make it easier for retirees to access their savings could lead to an increase in so-called ‘silver splitter’ divorces.
The reforms, which take effect in April, mean that from the age of 55, people will have the freedom to take their pension as a lump sum, or as a series of lump sums, rather than having to buy an annuity.
This means that the over 55s will be able to access their entire pension pot as cash, which could prevent unnecessary property sales and pension transfer delays for those divorcing.
The changes apply to ‘defined contribution’ or ‘money purchase’ schemes where both the employee and employer put in money. They do not apply to pension schemes linked to a salary.
In 2013, the Office for National Statistics reported an increase in divorce rates amongst over-60s, in contrast to a general decline in divorces overall. Between 1990 and 2012 the number of men and women divorcing over the age of 60 has soared by more than 85%. Based on current marriage and divorce rates, the total number of over-60s divorcing could increase from 15,700 in 2012 to more than 22,000 in 2037, according to the International Longevity Centre.
Even when a couple are on amicable terms, the process of ending a marriage and dividing assets is always likely to be a difficult time. Divorce at any age can be a stressful experience but for older couples it may be further complicated by the fact that they have accumulated more substantial assets – a valuable pension, for example, a business or substantial property assets – that must be taken into account when making financial arrangements on divorce. The Government’s new freedom reforms could make it easier for couples divorcing in later life to split their assets.
Expert legal advice can be crucial in resolving these financial and other issues and the non-confrontational approach followed by Resolution members, such as the family law team at Palmers, can be helpful in settling matters in a constructive, non-court-based way. For more information, please contact me on 01245 322111 or KDouble@palmerslaw.co.uk.