New research from Legal & General Retail to mark Divorce Day1 which takes place today, has found that 272,000 people (13%) have delayed their divorce due to cost-of-living pressures. Money played a role in many people’s decision to delay separating, but particularly with divorces that have happened since 2020 – among recent divorces 19% delayed due to financial reasons.
According to the research, despite holding off to spare their bank balance, nearly half of people who divorce (48%) see their incomes shrink by an average of 31% in the year after their separation. This can leave someone with £9,700 less a year on average.
Divorces are ‘financially unfair’
In two out of five divorces (40%), people felt that it wasn’t an equal divorce financially, with one party being favoured. Despite this, just 7% of people will consult a financial adviser as part of their divorce.
This can have long-term financial implications. Only 31% of people who had divorced had signed Clean Break Orders, meaning that more than two-thirds (69%) could be liable to a future claim from their ex-spouse.
Commenting on the data and the problems involved, Paula Llewellyn, Managing Director (Direct), Legal & General Retail, said:
“When people divorce, money is always an important factor especially during the challenges of the cost-of-living crisis. However, as our research shows a separation can have long-term implications for people’s finances. Many couples have not even sorted the necessary paperwork to ensure they have a clean break from their financial obligation to one another. By consulting a financial adviser people increase the likelihood of a divorce being fair and equal. While the number of people seeking out this support has increased in recent years, we need to encourage more couples to take this step.”
Divorces impacting retirement
The financial challenges of divorce are particularly pronounced for people aged over 50 who end up saving £63 less each month towards their retirement due to these financial challenges. Nationwide this means that 200,000 people are saving less for retirement.
The research found that while divorcing couples often consider the value of their family home (58%), just 20% consider pensions when dividing assets with their partners and 29% actively waive their rights to the value of them.
As of today, the Pensions and Lifetime Savings Association (PLSA) has introduced new guidance designed to support private sector occupational pension schemes when providing information to scheme members on Pension Sharing Orders (court orders that help couples divide their pension funds upon divorce). The Pensions Sharing on Divorce Guidance can be downloaded from the PLSA website.
Commenting how pensions are often seen as a priority in divorce, Joe Dabrowski, Deputy Director – Policy, PLSA said:
“Understandably, working out how to split pension assets is not the first priority for most separating couples. But it is really important to make sure both parties are provided for in retirement, especially when one party has been the primary earner and built up a pension, while the other – usually because they have taken on more family caring responsibilities – has not.”
1Opinium Research conducted 2,750 online interviews of UK adults who are divorced. The research was conducted between the 20th and 30th November 2023
