You could miss out on £80,000 if you don't put a pension agreement in place during divorce, expert warns

Separating assets, including property and possessions, are among the main obstacles faced by spouses as they look to cement an amicable split.

That’s alongside the emotional turmoil and child custody negotiations that many experience.

But James Brien, founder of Easy Online Divorce, says the pressure of the situation often leads to them ignoring other aspects, particularly pensions, which could leave one party seriously out of pocket later on in life.

He explained: “Generally speaking there's a lack of awareness around rights to finances when it comes to divorce.

“It’s a common misconception that money matters are dealt with as part of your divorce proceedings. But that isn’t the case - a divorce is only the legal ending of a marriage or partnership.

“The number of pensions that are never discussed is very high and they can get overlooked for a few reasons.

"When it comes to divorce, people are worried that bringing pensions into it will delay things. But in a lot of cases the pension is the second biggest asset a couple has after property.”

Research by Scottish Widows put the typical cost to divorced women at £77,000 at retirement. This is because men’s pensions are much larger by their mid-40s, when most divorces happen, due to not having to take time off work for childcare.

Since 2022 the ‘no-fault’ divorce has allowed marriages to end without placing blame on one party.

Before this you had to put the onus on a spouse for the breakdown by providing evidence of unreasonable behaviour, or you had to have been separated for two years if you both agreed to divorce.

While this means it is much easier to navigate an amicable split, it’s still important to agree on who gets what.

Pensions are considered a marital asset and are usually split between divorcing couples. But the exact split and how it will work depends on many factors.

The main ones include the length of the marriage - if it’s short then some of the assets may not be considered - the levels of contributions made by individual parties, plus the age and health of those involved.

The needs of any children or dependents is also something that will be taken into consideration.

Pensions can be divided in a number of ways as part of the divorce process.

Pension sharing means each person has their own benefits, while pension offsetting sees one side give up their claim to part of their pension in exchange for a larger share of other assets

Mr Brien, author of ‘The Mindful Divorce: How to Heal and Be Happy After Separation’, said: "If one of you has gone to work and one of you has stayed at home with the children, the assumption is when you get older you will share some of that pension pot.

“That’s because one of you has put your career on the back burner to raise the children. It limits the ability to put away a pension for the future, which a court will take into consideration."

The Easy Online Divorce expert says there is a clear need for a consensus to ensure both parties don’t have cause for complaint later on.

The best method for doing this is by drawing up a consent order, which is a legally-binding document that outlines the financial arrangements agreed upon by both parties.

Mr Brien added: “Without a consent order, your ex-partner could make financial claims against you in the future, even years after your divorce is complete.

“A Pension Sharing Consent Order, which will ensure a fair distribution of pension pots for a secure financial future, can be put in place for as little as £599.”