Pensions and divorce – Ill health
Posted August 9th, 2010
An issue to be aware of when considering ill health in divorce matters, is its potential impact on pension asset values.
It can reasonably be argued that based on longevity a pension asset in the hands of someone with a shorter life expectancy has less value than it would in the possession of someone with an average life expectancy. It is anticipated that the pension income will be paid out for a shorter period of time.
In a divorce, it would seem an appropriate approach to look at pension sharing and perhaps consider a greater proportion of the pension be shared with the spouse who is in good health. This may enable the spouse in poor health to retain more non pension asset (which could die with them) and pass this wealth down through their family. For completeness, a review of the death benefits available should also be undertaken.
For more information on this and how life expectancy affects pension valuations and other aspects of your finances on divorce, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Brian Spence
09.08.10
Good point – sharing the pension against the life with the best health and then hedging by means of a term insurance policy seems like a sensible bet. Could a specific life insurance policy be purchased to cover the eventuality that the healthy partner is outlived by the unhealthy one? Certainly could in theory but in practice?
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