Divorce
Important information - the value of investments can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not normally be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity's advisers or an authorised financial adviser of your choice.
Know what you're up against
According to the most recent figures from the Office for National Statistics, the majority of the 80,057 were opposite-sex divorces.1 This is almost 30% down on the year before (this statistic could have been inflated due to delays in divorces during the Covid pandemic). Nevertheless, it's the lowest number of divorces since 19711.
The number of divorces and dissolutions granted during 2022 may also have been affected by the introduction of the Divorce, Dissolution and Separation Act, which came into effect on 6 April 2022. This act introduced new mandatory waiting periods at important stages, and other changes including allowing couples to end a partnership jointly, and the removal of grounds for divorce1.
As for the divorce settlement itself, there are laws to protect both sides to bring about a fair conclusion to a couple’s finances. But what does fair mean?
A recent report by Opinium Research on behalf of Legal and General showed that women 'are likely to see their annual household income take a serious financial hit in the first year following their divorce, falling by an estimated 41%, compared to just 21% for men2'.
The disparity between men and women is caused by a number of factors, one being that men are more likely to be the main breadwinner in families (70% versus 21% of women), and commonly earn more. This presents a challenge as couples separate their finances and fund two separate households. And 'one in four women financially struggle post-divorce (24%) compared to their male counterparts (18%), leading to increased likelihood of worries about the cost of essentials (21% versus 13% of men)2'.
One thing that often slips under the radar is the pension. And as women tend to save far less into their pension (some £23,000, compared to men's £60,000) this can really take a toll on women’s finances if this isn’t taken into consideration when divorcing.
There's more about pensions and divorce here which is essential reading. It's important you know what you're entitled to.
Sources:
1.
ONS: Divorces in England and Wales: 2022
2.
Legal and General Retail - 7 February 2024
Take control
Getting divorced - no matter how amicable - can be a stressful time. Being prepared can help you navigate these toughest of times.
- If you’re thinking about divorce, we have lots of practical guidance for you to read in our divorce and finances pages.
- Besides your pension and your house (arguably your largest assets), don’t forget about any investments you hold - which may also be part of your divorce settlement. It’s possible to transfer assets between husband and wife without there being a capital gains tax liability, but this should be done in the appropriate tax year. Leave it too late and you’ll face a tax charge. You should also update your will.
- Once your divorce settlement is in, it can be intimidating to know what to do next - especially if you've received a large sum of money. You may like to talk to a financial adviser if you’re looking for a personal financial recommendation.
What you could do next
Talk to our advisers
Our team of advisers can help you achieve your investment goals, whether those relate to one-off events or more complex needs with ongoing support.
Start looking after future you, today
Take control of your retirement savings and get your money working harder with the Fidelity SIPP.
Explore regular saving
Making regular monthly contributions to your investments as part of a savings plan could help them grow into a sizeable sum over the long term.
