Cost pressures delaying 272,000 divorces, researchers claim
January 2 has been dubbed ‘Divorce Day’ as the peak day for divorce inquiries to lawyers.
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Your support makes all the difference.More than 270,000 divorces have been delayed because of the cost-of-living crisis, financial service providers have claimed.
Financial pressures delayed 19% of divorces, with marital break-ups particularly affected since 2020, researchers at Legal and General found.
The data showed nearly half of people who did divorce suffered financially, with their annual income dropping by an average of almost £10,000 in the year after separation.
Despite 272,000 divorces being reportedly postponed due to money, just one in five couples discuss their pensions when dividing their assets, focusing instead on things like the family home.
On January 2, dubbed “Divorce Day” as the peak day for divorce inquiries to lawyers, the Pensions and Lifetime Savings Association (PSLA) released new online guidance on how private workplace pension scheme providers could help spouses splitting up.
Paula Llewellyn, managing director of Legal & General Retail, said: “When people divorce, money is always an important factor especially during the challenges of the cost-of-living crisis.
“However, as our research shows a separation can have long-term implications for people’s finances.
“Many couples have not even sorted the necessary paperwork to ensure they have a clean break from their financial obligation to one another.
“By consulting a financial adviser, people increase the likelihood of a divorce being fair and equal.
“While the number of people seeking out this support has increased in recent years, we need to encourage more couples to take this step.”
Income concerns, cost-of-living pressures and the price of divorce were all cited as reasons to postpone the split.
Nearly half (48%) of divorcees saw their incomes shrink by around 31%, leaving them with an average of £9,700 less each year.
Legal and General said that 40% of divorcees believe the process ends up financially unfair and that one of the parties came out on top.
A total of 69% of people did not sign Clean Break Orders, leaving them open to a future claim from their former spouse.
Retirement funds are being hit too – the majority get divorced over the age of 50 and, as a result, they put an average of £63 less into their pension pot each month due to the money strain.
Around 200,000 people are saving less for retirement.
Despite the the impact on savings, just 20% of divorcing couples think about their pensions when dividing assets while 58% consider the value of their family home.
Around 29% actively waive their rights to the value of their pensions.
Joe Dabrowski, deputy director of policy at PSLA, said: “Understandably, working out how to split pension assets is not the first priority for most separating couples.
“But it is really important to make sure both parties are provided for in retirement, especially when one party has been the primary earner and built up a pension, while the other – usually because they have taken on more family caring responsibilities – has not.”