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The growing number of DIY divorces that are arranged without a solicitor’s help could put divorcees, and particularly women, at risk of lower retirement incomes, experts warn.
Since 2018, couples have been able to divorce without hiring a legal representative, and this can be both a faster and cheaper option when circumstances are relatively straightforward.
However, couples may be unaware of their entitlement to their ex’s pension on divorce, under what’s known as pension sharing orders. This is essentially when defined benefit or defined contribution pension benefits are split when you divorce, and typically, the partner without or with a small pension receives a share of their partner’s benefits in their name. Read more in our article How are pensions shared in a divorce?
Ben Glassman, Financial Planning Partner and Head of Family & Divorce at leading wealth management firm Evelyn Partners, said: “The temptation is to try and ‘go DIY’ over the whole process, including the financial settlement. This is understandable as people are keen to save on fees wherever possible.
“But the biggest legal bills occur when there is a dispute over the financial settlement, which is a separate matter to the divorce itself, and can often drag on much longer. An agreement over the splitting of assets that is arrived at amicably, and preferably at an early stage, is important if both parties want to minimise stress and expense.
“For many couples to achieve this, advice from a financial planner with experience of divorce will be invaluable, particularly where pensions or other complex matrimonial assets are concerned. The financial implications are for some families more acute amid higher living and borrowing costs, and the outlook for the jobs market is uncertain at best, which can add to the jeopardy.”
Starting again later in life: 10 essential steps to help you plan for divorce
If you’re feeling uncertain and overwhelmed about what comes next, a pre-divorce checklist can help you stay organised and in control, helping you approach the future with greater confidence.
In this free 10-point guide, England & Derbyshire Solicitors share 10 essential steps to help you plan for divorce thoughtfully, covering the emotional, legal and financial considerations that matter most.
Why women may be worst affected
Quick-fix DIY divorces risk leaving women in particular with less retirement income than they might have been entitled to, as they won’t have received legal help to clarify what they can claim. Current estimates suggest that the difference between the pension pots built up by men and women over their lifetime is 46%. According to the Pensions Policy Institute, by the time they reach retirement, the average UK man holds a pension pot of £125,000 compared to just £57,500 for women. Read more in our article Women and the gender pensions gap.
A DIY divorce is, as the name suggests, one that is arranged entirely by you and your ex-partner. You still have to apply through the court in order to make the divorce official, but you may not have a pension sharing order in place.
Melissa Markham, associate family and collaborative solicitor at Whitehead Monckton, said: “The rise in DIY divorces will undoubtedly leave, not just ex-wives, but ex-husbands vulnerable financially, and potentially with less on retirement than they are entitled to.
“The problems I foresee are that they would go on to deal with financial matters themselves, reaching unsuitable agreements which do not meet their financial needs, or those of their children, as well as they should with legal advice. This could happen because parties do not fully understand their long-term and/or specific needs but could also be the result of an imbalance of power between the parties, forcing one party to agree to compromise their position to their detriment.
“Pensions are notoriously complicated and are very often ignored when couples deal with their financial matters without legal advice. This can leave parties without any retirement provision when they should have received a pension settlement to support their financial needs long-term.”
When getting a divorce, there are several options for dealing with pensions, including pension sharing and ‘pension offsetting’, where the value of any pension is offset against other assets. For example, one of you may keep your pension in full, while the other receives another asset, such as the family home.
Who are DIY divorces right for?
While a DIY divorce can be a useful option in an amicable split, they should only be considered if you expect dividing your finances and assets to be very simple, and without the potential for issues or claims in the future. They may be a better option if you have only been married for a relatively short time, and if you don’t have any children.
In Scotland, there are particular rules about which couples can use DIY divorces, and you can find out more about these here. Bear in mind that even if you believe a DIY divorce is the most suitable option for you, it may still be worth seeing a lawyer at the start of the process to see if there is any reason why doing it yourself may not be the best option given the circumstances.
Alistair Myles, family law solicitor and founding partner of Ribet Myles LLP, a specialist family law practice, said: “For individuals going through a divorce where there are marital assets such as pensions, property, stocks and shares and cash savings, it is always worthwhile taking legal advice on what a fair settlement could look like.
“Whilst the starting point for dividing assets on divorce is a 50:50 split between the divorcing parties, there are often reasons why there could be a departure from that calculation.
“Where certain assets are difficult to value, or subject to fluctuations in value – such as pensions – it is especially important to take advice on their value now, but also their likely value in the future. It is important to do this to ensure that each party leaves the marriage with as fair an outcome as possible.”
Starting again later in life: 10 essential steps to help you plan for divorce
If you’re feeling uncertain and overwhelmed about what comes next, a pre-divorce checklist can help you stay organised and in control, helping you approach the future with greater confidence.
In this free 10-point guide, England & Derbyshire Solicitors share 10 essential steps to help you plan for divorce thoughtfully, covering the emotional, legal and financial considerations that matter most.
Where to go for advice
Seeking financial and legal advice at the start of a divorce can be extremely helpful. A financial planner can assist with working out and implementing the pension share, as well as reviewing your overall financial situation. They may also provide advice on whether consolidating your pensions is a good option if you end up with several retirement pots, and look at where your retirement savings should be invested.
For more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
If you think mediation could be an option to help you resolve things, visit the National Family Mediation website. More divorcing couples than ever are seeking ways to go through the separation process amicably, without the need for lawyers.
Alternatively, you can find a solicitor with the help of Resolution, a membership organisation for professionals who work with separating couples. All members commit to taking a non-confrontational approach to help couples resolve their issues.
Starting again later in life: 10 essential steps to help you plan for divorce
If you’re feeling uncertain and overwhelmed about what comes next, a pre-divorce checklist can help you stay organised and in control, helping you approach the future with greater confidence.
In this free 10-point guide, England & Derbyshire Solicitors share 10 essential steps to help you plan for divorce thoughtfully, covering the emotional, legal and financial considerations that matter most.
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Starting again later in life: 10 essential steps to help you plan for divorce
If you’re feeling uncertain and overwhelmed about what comes next, a pre-divorce checklist can help you stay organised and in control, helping you approach the future with greater confidence.
In this free 10-point guide, England & Derbyshire Solicitors share 10 essential steps to help you plan for divorce thoughtfully, covering the emotional, legal and financial considerations that matter most.
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