Would you prioritise pension or savings before divorce?

[Thesearenotthedroidsyouarelookingfor]

Sort of in a ducks in row stage of getting ready to leave. Eldest DC likely to move out next year so am hoping the timing will be good to go and I won’t have to factor them into housing.

Currently my pension is pretty non existent (£20k) and I am turning 50 this year. I’ve been in a position to increase payments into my my pension and typically put in about £350 a month. I’m self employed so no employer contributions. Sometimes I will throw in an extra lump sum such as a premium bond win too.

I have about 40k in savings and now wondering if for the next 12 months I should focus on more savings rather than the pension. I am probably in the position to save around £1k a month or should I be adding more to my pension.

If I leave and we sell the house I would likely get £200k equity and would need about £125k mortgage to buy something. Earnings wise I’m not sure long term but im building my business so realistically I would say I can make around 40k this year and hope to keep increasing. No other assets between us I think husbands savings are around £10k and he stopped paying into a pension years ago so his is only worth around £70k.

The pension situation is my biggest worry and if I could stay in the marriage I would be throwing a lot of money at it right now but I just can’t face staying. Plus if I stay husband refuses to consider starting to pay i to his pension so no idea what he has planned financially for retirement. I’m not looking to shaft husband by hiding savings and would hope for a clean 50/50 split. Ideally he keep his pension I keep my cash savings to help by a house.

So in my situation what would you do? Save to leave or build up the pension?

Before even getting to pension vs savings, I would take a step back and the first thing I would say is please get proper legal advice before agreeing to leave each other's pensions untouched.

Pensions form part of the overall financial settlement, including his, and you are not being unfair by even considering that.

That matters here because you are framing this as your £40k savings, your pension, and a 50/50 split on the house. That assumption is doing a lot of the work in your question. If it turns out not to hold, the answer to "pension or savings" changes completely.

There is also the other side of it. You are self-employed, so no employer contributions and less predictable income, and you are likely buying again afterwards with a mortgage you'll need to qualify for. Accessible cash has real value in that position, not just as a fallback.

So I would spend the next few months getting clear on three things: what both pensions are actually worth, what the likely settlement looks like, and how much accessible cash you would realistically need to set yourself up. The pension vs savings decision gets much easier once those are in front of you and much riskier to make before.

The thing about pensions is that your contribution is grossed up by HMRC at your highest rate of tax so there really is nothing like it - regardless of how the funds perform. But it’s horses for courses so a good financial advisor would be able to give you options.

Thanks both you’re right I need to sit down and work it all out properly.

I would go and get legal advice now, and then plan

But both of you should really be paying into pensions

I agree we both should but he won’t even consider starting paying into his again 🤷‍♀️ I was a SAHM for a long time and then didn’t earn much so didn’t prioritise it. My mistake but here we are! 7 year ago I had zero savings or pension so just have to keep working on it.

I agree with the first response - get legal advice so you're clear on what the financial settlement might be. Plan from there - access to cash may be more valuable to you irrespective of tax advantages. Also, it's a very slow housing market so I would factor in renting for a while in your plans.

Regardless of where this money is allocated it is considered a joint assets for the purpose of the divorce financial settlement. You need a solicitor to advise you of all this. If he has built up a pension that needs to be considered. Why is he not paying in to his does he know about divorce?

Id be inclined to keep some cash ‘stashed’ away to help you set up even if this covered essentials like a bed or car deposit, I’ve heard over the years of women doing this in different ways, not necessarily to be unfair and hurt the other but to try to regain something in an inequitable situation and have some peace of mind eg having a bed.

Well done by the way for turning around your own financial security.

Aside from the divorce a pension plan is usually more financially efficient than cash savings. For example if you pay into a SIPP you automatically are repaid tax from HMRC and then the investments you chose grow…this beats cash savings rates hands down. If you have already then it’s ISAs to fill after that for future tax free earnings from interest.

However access to cash to cover unexpected bills illness market dips is always recommended.

So in the short terms I’d stash the cash somewhere or start buying extras for the house to take with you when you go, stored them elsewhere?

Sort out cash v pensions later and have a medium and long term plan. Having financial security like this is desirable IMO.

Having been through this myself the financial order and the divorce are two different things.

Divorce is easy. The negotiation of the financial split often harder unless you agree and the judge agrees with your agreement.

Essentially you will have to disclose all you financial assets for a financial order so you need legal advice now at the planning stage.

It may not be as straightforward as one may think, you need to speak to a solicitor and get their guidance on what is a reasonable and fair split