‘Silver-splitters’

More couples are deciding to part later in life

Divorce is not purely exclusive to the young or middle-aged, and we’re seeing a steady increase in what have been dubbed the ‘silver-splitters’ – couples who are deciding to part in later life.

This growth in ‘silver-splitters’ brings into sharp focus the impact divorce can have on retirement income. Pensions can be a significant source of accumulated wealth for those in their 60s. For that reason, it’s important that pensions are carefully considered in the context of a divorce.

Here are four important matters you might want to consider if you’re a ‘silver-splitter’ in this situation:

1. Make sure you have income for your retirement
Sometimes, one party wants to keep the house – after all, there might be memories of happier times there with young children. But taking on the whole mortgage can carry risks if you can’t afford it. Sometimes, downsizing and sharing a partner’s pension is a safer option. This is especially significant for women who have been stay-at-home mums, as they may not have their own pension, giving them a real gap in terms of what income will support them in retirement.

2. How to deal with a pension during a divorce
There are basically three ways in which a pension can be divided. Which one is right for you depends on your circumstances and the types of pensions involved. Taking legal and financial advice will help you make the right decision.

Pension offsetting: This is where a couple balance how much the pension is worth against another asset, such as the matrimonial home. For example, if one partner has a large pension and the couple jointly own a home worth the same amount, they may agree that one partner can keep the property and the other the pension.

Pension earmarking: A couple can arrange that when one party’s pension eventually comes into payment, a portion of it will be paid to the other party. Bear in mind, however, that divorce usually indicates the desire for a clean break, but earmarking means you have to keep an eye on your ex’s pension.

Pension sharing: This involves splitting a pension into two new funds, with each partner getting their own pension pot for the future. Since it involves more of a clean break, it’s often a preferred method.

3. Make a new will
As well as reviewing your pension during a divorce, it’s also essential to think about a new will.  If you don’t already have a will, then separating from your spouse is certainly a trigger event to prompt you to make one. Your new will should reflect your new situation to ensure the right people inherit from you.

4. Don’t forget to keep an eye on tax
If your divorce leaves you with assets worth more than £325,000, Inheritance Tax (IHT) could affect your estate in a way it didn’t when you were married, because your estate on death won’t get the spouse exemption, after you divorce. Assets which one spouse leaves to another are usually exempt from IHT.

It’s easy to lose track of pensions

Helping you take full control of your retirement savings

People change jobs, employers change their names but, more importantly, we all forget things from time to time. With that in mind, it is easy to lose track of pensions that you have paid into over the years.

If you do not actively look for your lost pensions, then you take the risk of relying on them looking for you! This can be difficult for them to do if, for example, you have changed your name through marriage or moved home yourself.

To locate a lost or forgotten pension you can contact The Pension Tracing Service, part of The Pension Service. They have details of more than 200,000 personal and company pension schemes and will search through these free of charge on your behalf.

For the best chance of being reunited with a lost scheme, you need to provide as much information as possible. This can include the type of scheme; the name of the employer, and any new name it may have, and the nature of its business; the name of the pension company; and when you belonged to the scheme.

Once located, they will provide you with the latest contact details to help you track it down and take full control of your retirement savings

Baby boomers’ top five biggest financial regrets

New survey reveals how some approaching retirement wished they had made different choices

Not saving enough for retirement is the biggest financial regret among those aged 55 or over (today’s baby boomers), according to the findings of an annual online survey from Standard Life by YouGov Plc. Nearly one in five (18%) baby boomers said they wish they’d started saving for their retirement when they were younger.

The top five biggest financial regrets for baby boomers – they wished they had:

1. Saved for retirement earlier (18%)
2. Avoided running up debt on credit cards or store cards (16%)
3. Set and stuck to a budget (6%)
4. Spent less on nights out and saved more in general (5%)
5. Invested in a Stocks & Shares ISA (5%)

Approaching retirement
But while the biggest regret for those approaching retirement is their lack of savings, the biggest regret for all other generations is running up debt on credit and store cards. Those aged 35–44 are most likely to have this as their number one financial regret (21%), while just 12% of 18–24-year-olds had it as number one, alongside wishing they had spent less on nights out and saved more.

Wake-up call 
This research will be a wake-up call to the many people who aren’t saving enough for when they retire. The value in starting to save early is clear in terms of increased potential for growth. We also know from previous research that parents often find they need to de-prioritise their own saving when they are older, to help support their adult children with large expenditure such as university fees and deposits for their first homes. So trying to close up a savings gap later on in life can be really tricky.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size for the 2014 survey was 2,591 adults. Fieldwork was undertaken between 5–7 March 2014. The surveys were carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.

A PENSION IS A LONG TERM INVESTMENT THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.