Separating couples warned not to overlook pensions

PENSION funds are now seen as one of the biggest assets in divorce cases, with couples being urged to pay closer attention to their value when finalising a separation.

According to one expert, in the current environment, a couple’s pension is often worth far more than other assets, including their home.

Pension consultants Astons said the Irish divorce rate has increased to 16% since its introduction in the 1990s. Senior consultant Barry Kennelly said: “Future financial security is paramount for both parties but particularly for spouses who look after the children and do not have a pension in their own name.

“The most heated debates in separations tend to be over who gets the family home or how it is split and over income rights.

“However, anecdotal evidence would suggest that minimal consideration is given toward potentially the greatest asset of all – the pension fund.”

One example cited by Astons is that of a married couple who enter into a separation agreement.

“The agreement primarily focuses on property assets and the maintenance payments, which are usually payable while the children are still in education or until the main earner reaches retirement.

“But when all the children have left home, the harsh reality bites and the magnitude of financial decisions impacting on their future becomes apparent,” said Mr Kennelly.

The consultants said pension “agreements” between spouses have no legal effect. Changes to pension entitlements can only be settled by way of a Pension Adjustment Order, they said.

“In the same way property experts are consulted in relation to the family home, the parties need professional advice with regards to the pension,” said Mr Kennelly.