My spouse has a pension arrangement but I have nothing – what should I do? 

The untimely death of a spouse and divorce have at least two things in common. Firstly, we all say they will never happen to us and secondly, they can both stop our income stream instantly.

Though we all say we don’t need life assurance or critical illness because we are young and healthy, there are accidents on Sheikh Zayed Road everyday just waiting to prove us wrong – and when they do so, it is too late to do anything about it.

Likewise, divorce rates seem to be rising year after year. So what would happen to the income stream of the ‘homemaker’ should a couple get divorced or the worst happens to the salary earner?

Let’s take their untimely death first. Unless the salary earner has life insurance in place, it is unlikely that the surviving spouse will receive anything. Some UK pension arrangements provide the spouse with a pension of 50% of the full benefit but, given that most peoples’ pensions are under-funded in the first place, this will not amount to much.

If the spouses’ death occurs whilst you are both in your 20’s or 30’s it can be argued that the surviving spouse can find work and contribute towards their own retirement needs. But what would happen if the worst happened in your late 40’s or 50’s and you had not made a ‘contingency plan’? There certainly would not be enough time to start saving, if you could find work, and State benefits for expatriates are reducing day-by-day.

Divorce may have a similar effect. Whilst the effect may not be quite so immediate as the salary earner has an obligation to contribute towards the children’s welfare, what happens when the kids leave home, your ex-spouses contributions cease and you are in your late 40’s? 

If the divorce is civilised, the ex-spouse may agree to continue providing you with a small income but most people certainly won’t be in a position where their pension fund is sufficient to cover their retirement and that of their ex-spouse.

As such, it is vital that the ‘homemaker’ should also have retirement plan in place; however small the contributions and whether these are made from the salary earner directly or out the joint savings account.

It is equally important to have sufficient life cover in place so that, if the worst happens to either spouse, the family have something to fall back on in the short term to cover accommodation costs, food & bills, clothing and schooling costs.