News

13 January 2020

Separation and divorce – pension sharing

Historically, financial planners have probably been called on most often to help in a divorce situation where clients are to receive a pension share to be invested in an arrangement of their own.

The choice of the specific pension provider is arguably less crucial these days, with modern pensions giving access to a huge array of funds, but the choice of investments, or specifically the mix of investments remains crucial. Do you need the money to work really hard for you, suggesting you take more risk with it, and, if that’s the case, are you emotionally able to live with the inevitable ups and downs of more risky funds?

Many divorcees might be seeking a degree of stability and certainty, having come through a traumatic and uncertain period in their lives, and so risky investments, in the short term at least, may be exactly what you don’t want. But being too cautious and holding money in a cash fund, for example, is also risky, as inflation is likely to erode the real value of the cash, and that’s before the charge for the pension structure is deducted.

Very relevant to how much risk you take is also the likely timescale before you need the money – the longer this is, the more risk you can potentially take, as there is more time for the funds to recover from any downturn. Conversely, the longer money sits in cash, the more it may be eroded by inflation. A good financial planner will discuss these issues, helping you to understand the trade-offs.

Our next and final blog concludes this series on financial planning around separation or divorce [blogs 1 & 2 ], asking the question, how important is the structure of your pension?

Richard Wadsworth is a Chartered Financial Planner at Carbon. Contact Richard via email on richard.wadsworth@carbonfinancial.co.uk or get in touch with your local office.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.

Sign-up for our Carbon Catch-Up Newsletter.

Signup

Sign-up for our Carbon Catch-Up Newsletter.

* indicates required

Carbon Financial will use the information you provide on this form to keep in touch with you and to provide updates and marketing. Please indicate below that you are happy to receive our updates in the future:

You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at alison.whyte@carbonfinancial.co.uk. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

Contact us today...

We have offices in Edinburgh, Glasgow, Aberdeen, Perth and London. You can contact us at any of our offices, or by email.

Carbon Financial Partners Limited is authorised and regulated by the Financial Conduct Authority. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

The Financial Conduct Authority does not regulate some forms of tax advice.
Registered in Scotland #SC386400.
Registered Office: 61 Manor Place, Edinburgh EH3 7EG, Scotland.
© Carbon Financial Partners 2021
www.financial-ombudsman.org.uk

Client Account | Personal Finance Portal | Privacy Notice | Cookies

Site designed and developed by Art Department