The Fair Share Report Sorting out Money and Property on Divorce by Emma Hitchings, Caroline Bryson, Gillian Douglas, Susan Purdon and Jenny Birchall highlights statistically some insightful research that as lawyers maybe we need to consider and adapt our practices not just in relation to pensions.
The Fair Share report is the research Report that has guided the Pension Advisory Group’s second report was release in February 2024. [Also known as PAG2] As with the original PAG it is designed to help legal practitioners, financial experts and judges and dare I say it, clients to understand the importance of pension sharing and to understand the potential issues. As a result, PAG2 is informative and an incredibly useful tool. However, it is very unlikely that many people will read the Fairshare Report. Still having read it I can say that it is a fascinating piece of research and well worth a read if you have time. Embedded in the Fairshare Report are a cornucopia of interesting facts that provide some insight into the world of lay clients.
The research was carried out in 2022 and 2023. In August and September 2022, 2415 divorcees completed a survey, followed by structured interviews between November 2022 and February 2023. Whilst the information contained in the report is up to date, the research stems from divorces for the previous 5 years and perhaps the full impact of the original PAG report of 2019 may not have filtered through.
One of the questions that the researchers were examining was “How do divorcing couples arrive at financial and property arrangements.”
Within the statics set out in this report, there is a trend for people not to use lawyers, even though clients found lawyers a good source of information regarding a divorce. Divorcing individuals also found the Government website to be another useful source.
Only 56% of divorcees reported having made use of lawyers or legal service companies at some point during the divorce process, and it will be of no surprise that those with assets under £100,000 or only debts were less likely to use lawyers. But even those with assets over £1,000,000 only 30% of parties both used lawyers. Fear of costs was a reason for not using lawyers but there were also other positive reasons, such as where there was trust between the parties or that they felt that their circumstances were straightforward.
Those who did use a lawyer throughout their proceedings, both men and women thought that a lawyer could get them a better deal or help them to keep their assets. Other notable reasons given for using a lawyer were such as not feeling comfortable in negotiating with their ex and domestic abuse. In both of these latter categories this was significantly more important to women than men. The report brings out the lack of confidence that many women feel in trying to negotiate a settlement.
Worryingly the report brings to the fore the lack of knowledge of parties regarding their own finances and the legal process. For example;
- 28% of women did not know if their ex had a pension compared to 21% of men,
- 30% of women who had a pension did not know the type of pension they had compared to 15% of men,
- 1 in 10 of the divorcees did not know what the equity was in their house at the time of the divorce. [94]
- A staggering 57% of people thought that they were not legally entitled to a share of their ex’s pension
- 37% of people thought that spousal maintenance was limited to 5 years!
Against this background of lack of knowledge, it can be understood why parties struggle to find a financial settlement if they have not been supported with legal advice.
The median asset value was £135,000, this includes pensions and debts as well as the family home. This would partially explain why clients do not wish to incur legal costs. The stark fact is that most divorcees were not living a life of luxury prior to the divorce and the divorce itself exacerbates their financial vulnerability.
With regard to pensions, it comes as no surprise that women’s pension pots were smaller, frequently less than £50,000 while men more likely to possess a larger pension pot. The report emphasizes the statistical significance of this disparity.
– Under £50,000 – 39% women
26% men
– £50,000 – £299,000 – £17% women
24% men
– £300,000 plus – 2% women
13% men
The study revealed a lack of awareness, understanding or interest which fed though to when making the financial arrangements. Even when represented by solicitors it was reported that pensions were not discussed. While this observation may apply specifically to the interviewee cohort, the case of Joanne Lewis v Cunningtons solicitors [2023 EWHC 822] suggests an element of truth to this. In this instance, a solicitor failed to recognise the significance of a police pension. Interestingly, no one diplomatically has mentioned that the Judge who approved the consent order also overlooked this crucial detail. The updated D81 now requires more details about the decisions making around pension assets.
Certainly, to my surprise the report draws out that 50/50 sharing is not the norm. Legally all lawyers will be aware that there are reasons as to why this may be. As a matter of law, needs will justify moving from 50/50 share point or desiring a clean break. What is interesting is that a several non- legal reasons can contribute to reaching an arrangement, including wanting stability for the children or avoiding ongoing contact with the ex. The relevance of these non legal reasons may lead to a 50/50 situation even when legally a different percentage division should apply.
The outcome of divorce for women with children was that they were in a weaker financial situation than men. However, this did not apply to woman under 50 without children. Not only did women earn less during the marriage, but they were likely to leave the marriage in a worse financial state.
Given that clients may not be well informed about their finances, the process and most importantly, may not be particularly interested in their own or their ex’s pensions, these are all matters that we as lawyers need to consider for those 56% of clients that do seek advice. As an experienced mediator and barrister who undertake finance work, I have found this research informative to assist clients understand the financial landscape and to make their own decisions to achieve a fair settlement in their personal circumstances. I hope that this article entices you to have a brief look at the Fair Share report.
Members of Becket Chambers are able to assist with matters pertaining to family finance; please contact the Clerks on 01227 786331 or via clerks@becket-chambers.co.uk for further details.
