Since 2016 only 971 of 14,274 NI divorces included a pension disposal, reveals research

Pensions are split between couples in Northern Ireland in fewer than one in 14 (7%) divorces, according to research from St. James’s Place (SJP).

A recent Freedom of Information request (FOI) by SJP, the UK’s largest wealth management group with offices in Belfast, found that, between January 2016 and August 2022, only 971 of the 14,274 divorces that were settled in court in NI included a pension disposal by way of a sharing or attachment order.

This shows that proportionately almost half as many pension-sharing or attachment orders were secured in NI as in England & Wales, where 80,290 of 602,491 were secured, still fewer than one in eight such orders.

It is particularly problematic given that pensions are usually the largest or second largest investment a household may have.

In addition, the impact of not sharing a pension could be more significant for women. According to data from SJP’s latest Financial Health Index, women hold on average £85,500 less than men in workplace-based or privately organised pensions.

Keith Willett, SJP regional director for business partnering in NI, said: “The figures suggest that there are a great many people divorcing in NI who are not taking pensions into account when dividing their assets.

"Pensions are complex and those complexities increase as you start to consider splitting them. This is why taking financial and actuarial advice is the best course of action when aiming to come to an agreement.”

Lisa Burke, senior partner with SJP and principal of devine wealth management in Magherafelt, explained: “It’s clear that relatively few people in NI are considering the importance of including pensions in any divorce settlement. While it is hard to know why definitively, it may be that for those divorcing at a younger age, they will prioritise the children and their property and disregard any pension pots.

"Those divorcing later, perhaps when the children have left home, may consider an amicable settlement most important and do not want to enter into a fight about pensions if they have otherwise divided their assets.

“In all scenarios, there is a lack of knowledge about quite how significant an asset a pension can be, and that it is often the second biggest or even the largest asset of a married couple, and that both parties could have a claim on that pension pot.

"Couples splitting up will almost always work on a division of the value of the family home, but not even consider the division of pensions. Even though it is a time of change and uncertainty, it is important to seek financial advice that takes into account both parties’ needs, both at the time of separation and for the future.”

Claire Trott, divisional director of retirement and holistic planning at SJP, added: “The importance of pensions when considering divorce should not be underestimated. There are many options available with regards to financial settlements and the easiest option at the time may not be the right choice in the long run.

“Pensions can’t just be considered a monetary asset and, taking into account things such as health and life expectancy, a 50/50 split isn’t going to give fair. This can be more apparent if you choose to offset one asset against another.”