Society has seen a shift in marital priorities over the previous century. Divorce was once considered an unthinkable disaster, while remarriage was not even factored into the equation.
How times have changed.
Now, individuals have the social and legal freedom to dictate their own marital preferences, whether they decide not to get married or divorce their partner.
Consequently, remarriage is becoming a more common occurrence. Indeed, ONS figures revealed that 18,862 remarriages took place in England and Wales in 2019 alone.
Marriage is, of course, a joyous event, with close friends and family joining together to celebrate the happy couple’s relationship. However, this does not mean that important financial considerations should be overlooked.
My Pension Expert has previously outlined how a former couple’s respective pensions in the unfortunate event of divorce. However, it is worth considering whether such arrangements would change if one of the partners chooses to remarry.
Key factors to consider
First and foremost, it is important to acknowledge that remarriage is unlikely to influence how much individuals receive as a state pension.
Private or company pensions, however, may require a bit more attention. Indeed, most pension schemes allow the member to add nominated beneficiaries to the scheme. This means that the beneficiary in question will still receive the scheme’s benefits when the original member dies. So, in the case of remarriage, the partner member will likely need to contact their provider to change their beneficiary.
And this change is undoubtedly worth making. After all, before the pension freedoms, the beneficiary could only access their partner’s pension (in the case of their death) if they died after the age of 75. Accessing the pension any earlier would see them facing a 55% tax bill.
Now, beneficiaries can inherit some or all the fund as a tax-free income drawdown or lump sum, up to the lifetime allowance – even if their partner dies before the age of 75. Again, this can give the new couple peace of mind that their other half will be financially secure, even in the unfortunate event of their death.
The key is for couples to organise this as soon as possible. So, if a partner dies unexpectedly, without updating their details, their former spouse or other beneficiaries might be legally entitled to access their pension, which could result in a costly and painful legal battle.
As such, scheme members should look to contact their provider and ensure the beneficiary is changed as soon as possible. Once confirmed, scheme members would be wise to request written confirmation in writing as well, to limit any potential confusion with the changing arrangements.
The value of advice
Of course, every new couples’ financial situation will be different, as everyone will have accumulated their own collection of financial assets, from pension savings to investments. And deciding how to merge or share assets accordingly can be a complicated process.
Accordingly, new couples would be wise to seek independent financial advice to ensure the process is as smooth as possible. An adviser, like our team of advisers at My Pension Expert, will be able to review both parties’ financial situation and develop a plan which will benefit their joint financial future.
It is all too easy to be swept up in marriage celebrations. However, it is important for new couples to ensure their retirement finances are all in order when they remarry to avoid any potential complications later down the line. And luckily, advice is on hand to guide them through the process. Then, once all is in order, the new couple can enjoy their life together, as well as their ideal retirement outcome!