More separating couples are choosing to dip into their retirement funds when they divorce, as they have few other assets, according to research.
Legal publisher Sweet & Maxwell claims there was an 11% increase in the number of pension-sharing orders in the past year and in total, more than one in 10 financial settlements ordered by judges in divorce cases now includes an arrangement to divide the main earner's pension pot.
Under a legislation that came into effect in December 2000, spouses were for the first time entitled to half of the main earner’s occupational - not state - pension on divorce when courts divided their assets.
But the current increase in orders has been attributed to the ongoing effects of a long and deep recession. With cash in short supply and property prices declining, experts claim a breadwinner’s retirement fund is now likely to be a household’s biggest asset.
However, while the courts’ decisions may be in the best interests of both parties, it means one spouse could have less money to retire with than they had been expecting.
The research follows new figures which show that the number of divorces in England and Wales rose in 2010 for the first time in almost a decade. In addition, Sweet & Maxwell said the total number of financial settlements decided in courts following divorce, or ancillary relief cases, rose by 3% in 2010 to reach 82,290. Of those, 10,205 involved pension-sharing orders, up from 9,218 in 2009.