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&#39Too few divorcees use pension splitting&#39

A new pension underclass is developing because divorcees are not taking advantage of pension-splitting legislation, warns national IFA Inter-Alliance subsidiary Professional Alliance.

More than 300,000 divorces have taken place since the regulations came into effect in December 2000 but fewer than 1 per cent of these have resulted in pension-sharing orders, according to figures from the Lord Chancellor&#39s Department.

Traditionally, judges awarded other matrimonial assets such as the family home in lieu of a pension, leaving divorcees with assets but insufficient retirement provision.

Changes to the law brought in by the Welfare Reform and Pensions Act 1999 in December 2000 allow a divorcee to receive a proportion of their spouse&#39s pension and receive benefits independently.

But the low take-up of pension splitting could be leaving divorcees seriously underfunded in their retirement, warns Professional Alliance, which is a support service combining the skills of IFAs and solicitors in dealing with pension-splitting issues.

Professional Alliance head Nevin Weakley says: “After the matrimonial home, pensions are frequently the biggest asset in a divorce settlement. The figures showing how infrequently pensions are split up are a major cause for concern and show the need for more interaction between matrimonial solicitors, actuaries and IFAs.”

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