How to han­dle di­vorce in re­tire­ment

End­ing your mar­riage can be even more fi­nan­cially crip­pling if you sep­a­rate in your 60s or 70s. Laura Suter out­lines the pit­falls

The Sunday Telegraph - Money & Business - - Money - Split the pen­sion pot?

The num­ber of peo­ple di­vorc­ing in re­tire­ment has risen in re­cent years, but this group needs to be aware of a litany of fi­nan­cial pit­falls as they di­vide a life­time’s worth of as­sets. Fig­ures from the Of­fice for Na­tional Sta­tis­tics show that be­tween 2005 and 2015, the most re­cent full year for which data is avail­able, the num­ber of women over the age of 65 get­ting di­vorced rose by al­most 20pc, from 4,654 to 5,554. The num­ber of men of re­tire­ment age get­ting di­vorced in­creased from 8,059 to 8,697, an 8pc rise, over the same pe­riod.

But those who di­vorce in re­tire­ment to­day will have more en­twined fi­nances than those who di­vorce at a younger age – partly be­cause they have spent more time to­gether, but also be­cause of gen­er­a­tional dif­fer­ences that typ­i­cally saw more non-work­ing women in house­holds pre­vi­ously.

Large pen­sion pots, state pen­sion en­ti­tle­ments, split­ting large prop­er­ties and in­her­i­tance tax bills are just some of the pit­falls to look out for, on top of the usual fi­nan­cial wran­gling of di­vorce.

“Gen­er­ally, older peo­ple will have more money in their pen­sion pots,” said Mary War­ing, of Wealth for Women, a fi­nan­cial ad­vice firm that spe­cialises in di­vorce cases. She said the is­sue was com­pli­cated by the fact that many cou­ples reach­ing the age of 65 to­day will con­sist of a hus­band who worked, and prob­a­bly has a valu­able fi­nal salary pen­sion, and a wife who did not work.

Pen­sion as­sets can be split in three ways: the whole fund can be handed to one per­son, with the other spouse get­ting some­thing of equiv­a­lent value from among the cou­ple’s other as­sets; it can be “ear­marked”, mean­ing that when money starts to be taken from the pen­sion it is split be­tween the spouses; or the pot can be split, known as “pen­sion shar­ing”.

Jon Greer, the head of re­tire­ment pol­icy at Old Mu­tual Wealth, said there were dis­ad­van­tages with “ear­mark­ing” that had made it less pop­u­lar in re­cent years. “For ex­am­ple, the pen­sion

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