Pensions hit from divorce ‘often overlooked’ by couples

A sharp rise in divorce cases since 2019 has prompted an uptick in the use of pension adjustment orders (PAOs) to divide and share pension funds between ex-spouses and their children. According to a recent survey of 215 financial planners, nearly all—99 percent, reported that individuals in Ireland are missing out on their pensions due to divorce or separation processes. The findings come from a study conducted by the Independent Trustee Company (ITC), highlighting how pensions, often considered one of the most valuable financial assets, are commonly neglected during these legal proceedings. Glenn Gaughran, head of business development at the pension trustee company, noted that while homes are typically viewed as the main asset, many still carry substantial mortgages, reducing their net value. In contrast, pensions, especially those with significant employer contributions, can accumulate considerable value over time. Despite this, he emphasized that pensions are frequently overlooked when couples consider ending their marriage. Divorce courts often issue PAOs, which require the division of pension pots among former spouses or dependents. These orders apply to various types of pension plans, including occupational schemes, personal retirement accounts, and buyout bonds. Over the past five years, a large majority—68 percent, of survey respondents observed an increase in the use of PAOs in divorce cases. This trend aligns with the growing number of divorce filings since 2019, when legislation reduced the mandatory separation period from four to two years. Courts Service data cited by ITC revealed that 4,550 divorces were finalized in 2025, marking a 28 percent increase compared to 2019. During the same timeframe, divorce applications rose by 24 percent. As the volume of divorce cases continues to climb, more individuals are expected to discover that their pensions become part of the settlement discussions. Gaughran warned that while fair distribution of assets is crucial in divorce settlements, the process can significantly influence future retirement planning. A decrease in pension benefits might lead to lower retirement incomes and diminished quality of life for both parties involved. He stressed the importance of seeking professional and financial guidance throughout the divorce or separation process to safeguard long-term financial stability. Financial planners and advisers underscored the need for proactive management of pension assets during marital dissolution. With pensions often representing a major portion of an individual's wealth, failing to address them could result in lasting financial consequences. Advisers noted that many clients are unaware of the potential impact of PAOs on their retirement savings until it is too late. As the legal landscape surrounding divorce evolves, the role of pensions in settlement agreements is becoming increasingly prominent. With more people navigating the complexities of divorce, the necessity for informed decision-making regarding pension divisions grows ever more critical. Financial experts continue to advocate for greater awareness and education on the subject to ensure individuals protect their long-term financial interests.