There's more to divorce than just making money
By Charlie Kirby - 3rd February 2009The government has announced that it plans to make a change to pensions legislation which will help many divorced people who have become the “stay-at-home” party and may not have an employee pension.
From April however, safeguarded rights will be abolished, giving divorcees much more freedom to take benefits when and how they choose. For example, benefits can be taken from age 50, and 25% of it can be taken as a tax free lump sum. Interestingly, this will also affect any previously arranged benefits coming into payment after April 2009, even if the divorce took place many years ago.
Improved flexibility around protected rights should be welcomed as an example of the pensions industry being dragged kicking and screaming into the 21st century. What should not happen however, is for an insurer to hijack the news and attempt to grab some headlines with a ridiculously flimsy quote which is tantamount to suggesting that the change in legislation could prompt more women to contemplate divorce.
But it's happened. The headline of one insurer’s press release was damning enough: “Are there benefits for getting divorced?”
Aside from the dubious grammar employed (one gains benefits from something, not for it), this statement callously implies that one gets divorced for some sort of financial benefit.
How ridiculous. Having witnessed my parents’ divorce, the one thing neither of them will claim to have got from it is a financial benefit – certainly not one that was worth going through the emotional pain and endless admininstration of a divorce.
The senior pensions policy manager at this life office summarises the changes to legislation with a real gem of a quote: “In extreme circumstances, there may also be a financial benefit for people who get divorced.”
Now, I’m all for selling your product and putting a creative spin on circumstances, but this seems to be something of a low blow.
A “financial benefit for people who get divorced”? Like having access to their protected rights 10 years earlier would make up for the enormous lawyer fees, the cost of court documentation, mediation fees, the possibility that you may have to sell/remortgage your property and the fact that you may have to get a job for the first time since you became a house-spouse? I’m not even sure that the 25% tax-free lump sum would make that much of a dent in those fees.
And that’s before you consider the emotional cost for getting a divorce – the heartache, the children being torn between two parents, the loss of contact with your former partner’s family. Let us also not forget that these emotional costs could in turn create a fiscal cost in the form of counselling.
So, by all means flag up the fact that the government has brought the legislation up to date in an era which sadly sees just over one in three marriages end up in divorce. But don’t pretend that the changes could at best, make up for the inconvenience of getting a divorce, or at worse, create a argument for choosing to go through with it.
Some lifestyle decisions are about more than money.