Financial hits of breakups: study

AUCKLAND: The financial fallout of relationship failure hits mothers the hardest — 73% being worse off after a breakup than their expartner, new research shows.

Fathers fared better: 38% being worse off financially than before the split.

The financial consequences of nearly 16,000 parents who separated during 2009 were analysed by Auckland University of Technology business senior lecturer Michael Fletcher.

In a world first, Dr Fletcher followed the economic fortunes of pairs of expartners up to three years after separation, using anonymised data. Researchers are not usually able to link the partner’s data.

All the couples had children, including stepchildren, grandchildren and other arrangements.

Dr Fletcher’s analysis found in 46% of the separations the man gained financially compared to their exspouse, after taking into account the change in their family size.

In around a quarter of cases both were worse off.

The research was referenced in the Law Commission’s report into the review of the Property Relationship Act and a recent court decision on a property relationship dispute.

Dr Fletcher explained that most women were worse off due to the couple bringing in a good income from the man’s earnings.

After separating, although the women increased their earnings, this was not enough to offset the loss of the expartner’s income.

They were also more likely to have care of the children. Any childsupport payments did not have a significant impact on ironing out the inequity between the pair.

‘‘The group where both partners were worse off looks quite different. The women still lose because they no longer have the man’s income coming into the household but the men were also worse off on average because their average earnings fell significantly.’’

In 11% of cases the women came out ahead. The final 16% of couples were both better off after splitting.

‘‘What came through was, first, that this group had a low average income before they separated and, second, that both the men and the women increased their earnings substantially in the year following the separation year.’’

Relationship failure can have the effect of pushing many former couples and their children into poverty.

The research found the collapse of a relationship led to large increases in poverty.

Compared with a matched comparison group of similar people who did not separate, poverty rose 16.4 percentage points for the women and 8.8 percentage points for men.

This impact lasted for the three years after separation.

Separation also had a significant impact on the average amount of benefit payments people received.

The average amount of benefit support paid to the men postbreakup rose 44%, while the average for women increased 300%.

‘‘Separation results in a movement on to welfare, especially among women, and that those who do move on to a benefit do not find it easy to move off.

‘‘It’s hard to get off the benefit because you need to be able to earn a pretty good income for it to be worthwhile as a sole parent.’’

Dr Fletcher chose the area of research as there is a lot of focus on soleparents in poverty but no information on what happens when people split up.

Over the last six years, Dr Fletcher used the Working For Families database to analyse what occurred when a couple separates.

He hoped the research would be used to reassess how welfare system and child support payments operated.

Divorce lawyer Jeremy Sutton said it was ‘‘undoubtedly true’’ that most women were worse off after a split than their spouse.

He said this was a combination of them being the primary carer for the children while the man was the main income earner.

Often they are less aware of their financial situation and where all the money is.

If women have been at home with children for some time they may also find their skills ‘‘stale’’ and their chosen industry has changed considerably since they last worked, Mr Sutton said.

‘‘It is very hard financially for the women going through a separation.

‘‘We have spousal maintenance where you apply to the court for some financial compensation. It’s very rare to see a man seeking spousal maintenance.’’

These maintenance payments can help a spouse keep the same standard of living while they get back on their feet, Mr Sutton explained.

However, to be awarded them, people often had to seek expensive legal representation.

Mr Sutton wanted to see more people try to solve their problems out of court.

He thought a mediation service similar to the Family Disputes Resolution should be set up for couples battling over property.

‘‘Might be better to sit down around a table and talk it through than get lawyers involved and everyone gets upset which ultimately upsets the children, more than anything.

‘‘It could stop it taking a long long time [to settle]. It can be painful for everyone involved. We want to have a clean break.’’ — NZME

❛ Separation results in a movement on to welfare, especially among women, and that those who do move on to a benefit do not find it easy to move off