If you have been divorced in the last 12 years, you may think that the whole thing is done and dusted. However, a new report has revealed that if you included a pension when you were dividing up your assets, then you may have gone horribly awry. And if your divorce was any time in the last 12 years, then the ex-wife may be able to come back for a bumper payday.
The problem is that a number of divorcing couples made mistakes when carving up pensions.
MistakesThe report, by Divorce LifeLine, showed that pensions may have been undervalued in as many as half of all divorce settlements since December 2000. Sali Jackson-Thomas, Partner and head of Family Law at JCP Solicitors, said: "Pension funds are often the main asset of a marriage and are frequently more valuable than the home."
Since this date, pensions have been brought into the divorce arena, and can be divided up along with the rest of the assets of the couple. Since that time there have been 1.5 million divorces in the UK. The business estimates that 750,000 affected divorcees (mostly ex-wives) could come back for tens of thousands of pounds each.
Typically the majority of pension benefits are in the husband's name, as he is statistically likely to have earned more, and had fewer family caring responsibilities. In many cases their wife underestimated the value of the pension, so they agreed to wave all rights to the pension in return for a bigger share of the family home.
Jeremy Wolff, founding partner of Divorce LifeLine explains: "One of these reasons may be offsetting, where the husband or wife without a pension receives a greater share of the house or endowment, and the other spouse keeps his or her pension. There is no fixed calculation for offsetting."
In other cases, they will get a pension valuation from the pension provider or trustee, and will take that at face value. There are plenty of experts who say that this is a perfectly adequate approach. However, Divorce LifeLine says that this may have led to a number of mistakes. It highlights that the special circumstances of an individual or the couple may make this inaccurate, so separate calculations need to be done by an actuary.
Should you?So will divorcees go back for more?
The process will cost a chunk of cash. This may be a set fee of a couple of thousand pounds. In the case of Divorce LifeLine the cost is 15% of the additional cash recovered. The technical nature of the claim means that while some couples may be able to reach an agreement without spending a small fortune on experts, most will need to pay for a valuation.
It will mean, therefore, that individuals need to make their own decision as to whether it's worth the cost and upset, and whether they feel their own settlement was fair.
The prospect of hundreds of thousands of ex-wives coming back for more money will come as terrible news for many divorced men, especially those who have ongoing maintenance payments, and may feel they are spending enough on their ex.
However, it could also dramatically transform the lives of many thousands of women. They may have made no pension provision of their own because they expected to be able to rely on their husband. By taking the wrong solution in divorce they could leave themselves penniless in retirement, so this is an opportunity to right the wrong.
But what do you think? is this a blow for fairness, or yet another way to fleece divorcees who are struggling enough as it is? Let us know in the comments.