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Assets and debts within couples Ownership and decision-making

Karen Rowlingson and Ricky Joseph

Foundation


Further information This report and a summary version are available in print and as a pdf from Friends Provident Foundation, Pixham End, Dorking, Surrey, RH4 1QA (foundation.enquiries@ friendsprovident.co.uk and www.friendsprovidentfoundation.org). Published 2009 by Friends Provident Foundation Pixham End Dorking Surrey RH4 1QA Š SPIU 2009 ISBN 978-1-906249-59-5 (pbk) ISBN 978-1-906249-60-1 (pdf ) All rights reserved. Reproduction of this report by photocopying or electronic means for non-commercial purposes is permitted. Otherwise, no part of this report may be reproduced, adapted, stored in a retrieval system or transmitted by any means, electronic, mechanical, photocopying, or otherwise without the prior written permission of Friends Provident Foundation. Friends Provident Foundation Friends Provident Foundation is a grant-making charity working to create the conditions throughout the UK for improved access to appropriate financial services for those who are currently excluded, particularly those on low incomes or otherwise vulnerable to market failure. It particularly wants to encourage thinking that deals with the cause of the problem. Established as part of the demutualisation of Friends Provident Life Office in 2001 and the flotation of Friends Provident plc, it is independent and has its own board of Trustees. www.friendsprovidentfoundation.org Institute of Applied Social Studies, University of Birmingham [[copy to follow]] Editorial and design by Magenta Publishing Ltd (www.magentapublishing.com) Printed in the UK by Hobbs the Printers Ltd


Contents

Acknowledgements

5

Executive summary

6

1 Introduction

10

2 Ownership of assets and debts

18

3 Making decisions about assets and debts

32

4 Policy issues

45

5 Conclusions

55

References

58

Appendices I

Fieldwork methods

61

II Topic guide

63

III Complexity of private pension provision

69

3


Acknowledgements

This research was funded by the Friends Provident Foundation and we would particularly like to thank Danielle Walker Palmour and Andrew Thompson for their support during the course of the research. We would also like to thank Sue Maddin at the Friends Provident Foundation and Helen Harris at the Institute for Applied Social Studies for their administrative help during the project. Our advisory group was also very helpful with suggestions and comments. The group comprised: Fran Bennett, David Darton, Jackie Goode and Debora Price. The research itself was very much a team effort and we would like to thank all those who took part in it for the excellent work they did. Recruitment of the sample was carried out by PlusFour, with Hikmot Ademosu in charge and transcriptions were carried out by The Transcription Company. The interviews were carried out by the authors and also by Jayne Thornhill. And, finally, we would like to thank our participants for taking the time to talk about financial matters that were, in some cases, quite difficult. We hope that this report does a good job in reflecting the issues facing the couples we interviewed.

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Executive summary

Introduction Despite increasing interest in asset-based welfare, and increasing expectations on people to provide for their own financial security, we know very little about how couples share, manage and make decisions about assets. The recent recession has highlighted concern about debt and yet, again, we know relatively little about how couples share, manage and make decisions about debts. The main aim of this research was to fill these gaps in knowledge. A total of 80 members of 40 working-age couples were interviewed in depth, with each partner being interviewed separately but at the same time. The couples were in a variety of relationship types and were of different ages and socio-economic positions.

Ownership of assets and debts An important distinction needs to be made between formal legal ownership of assets/debts and how assets/debts are perceived by members of the couple. For example, one member of a couple may have an ISA in their name but the money in it may be seen as a joint resource. Housing wealth, in our small sample, tended to be (seen as) split fairly equally within couples who were in their first cohabiting or marital relationship. But those who were in ‘subsequent’ relationships were much less likely than others to consider their housing equity to be divided equally within the couple. In most of these cases, women had more of a share of any equity than men as a result of previous divorce settlements (for example, trading off his pension wealth against equity in the home). Men in 13 of the couples seemed to have better pension provision than their partners but women seemed to have better provision than their partners in 7 couples. The remaining 20 couples had similar levels of private pension provision (which in 7 of these cases meant that neither had any). However, people were not always very sure about the level of their private pension coverage and so it is difficult to draw any firm conclusions here. Views about pension wealth were complex. Pension products were certainly seen as individually owned in the formal sense and this is unsurprising, as there are no pension products for couples. However, when people thought about future pension income they tended to see this in the same way as current income. So if current income was shared, future

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pension income was also considered to be shared. There were no examples of pension-sharing orders among those who were divorced. In the majority of couples in our sample, each partner had similar levels of financial savings. In the remaining couples, levels of saving varied slightly within the couples but there was no clear gender pattern in our small sample. Women in our sample were more likely to say they had problem debts (for example, arrears on household bills and credit commitments as well as struggling to make payments). We think this is for three main reasons: some women had been left with debts when previous relationships ended; some women seemed to spend more than men (and get into credit card debt); women seemed to be more willing to discuss/admit to debt problems than men in the interviews. ‘Relative resources’ in the couple, and marital status, seemed important in relation to the distribution of assets and debts within couples. These were linked to having children and to gender (because women tended to be the ones leaving the labour market and gaining housing equity from divorce).

Making decisions about assets and debts While there were few examples of major disagreements on financial matters within couples, there were clear discrepancies in how different members of the same couple saw their financial arrangements, with men appearing to give a more positive ‘spin’ than women on the couple’s financial situation. Decision-making in couples is a complex process. Although we have identified a broad typology here, there is overlap between some of the approaches. Also, couples’ approaches to decision-making varied depending on the subject. It is therefore difficult to categorise couples, overall, in terms of their decision-making approach. Nevertheless, and with those caveats in mind, couples generally seemed to fall into one of the following types: Joint and equal decision-making In these (5) couples, people said that joint decisions were made, with both partners playing an equal part in the discussions and decisionmaking. ■■ Joint decision-making but with one partner leading In these (20) couples, one partner played the lead role in making decisions for the couple. Sometimes this would involve discussing options with the other partner but sometimes the lead partner would be ‘delegated’ the authority to make decisions without much consultation or discussion. ■■ Independent decision-making In these (11) couples, decisions were made independently by one or both members of the couple, usually with little discussion between the partners. ■■ No decision-making In these (4) couples, no decisions were made on assets and debts. This did not necessarily mean, however, that there were no discussions on these issues. ■■

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Socio-economic status and relative resources appeared to be linked to different models of decision-making. In middle class couples where the man had the highest income, the couple were more likely to make ‘joint’ decisions, led by him. Where women had jobs in higher socioeconomic positions than their partners, it was the woman who would take the lead or the couple would make more independent decisions. Marital status also appeared to be linked to different models of decision-making, with cohabiting couples acting more independently than married couples. Re-married couples seemed particularly likely to employ joint and equal decision-making approaches.

Policy issues A wide variety of policy suggestions were made to us by those interviewed. For example, there was concern that ‘people in the middle’ were not receiving their fair share of financial support. Related to this, there was also concern about how means tests penalised (or failed to advantage) those who had saved. There was also concern about the complexity of certain financial products, not least pensions, but also mortgages. People wanted more education in schools from an early age and also free advice for people on personal finance matters. There was a widespread perception that the financial services industry was too quick to encourage people to borrow and did not provide good advice in their customers’ best interests. The Law Commission (2007) has recommended that certain cohabiting couples might be treated in the same way as married couples in law in relation to assets and debts; but the government has so far not acted on this recommendation. Our findings are particularly pertinent to this issue. They suggest that: People in our sample generally thought that, after a certain point, and in particular if the couple have children, cohabiting couples should be treated the same as married couples. Indeed, people thought that this was already the case in law and practice. ■■ However, there was a minority view that marriage should be treated differently and that cohabiting couples should draw up their own legal arrangements if they wish to share their assets and debts. ■■ Linked to this was the suggestion that people should make a ‘full disclosure’ of their financial situation when entering a new relationship. One person likened this to a ‘Home Information Pack’ – in effect suggesting that there might be a ‘Relationship Information Pack’ that included information about finances. ■■ Others also suggested that banks and other financial services providers should be obliged by law to inform a partner if one member of a couple were to take out a loan or other financial product. This was suggested, in particular, by people whose previous partners had accumulated debts without their knowledge. This brings individual privacy rights into conflict with any right to transparency in a relationship. But full disclosure/transparency is demanded on divorce – so should (could?) full transparency be demanded on marriage? Or even when (married) people take out a loan, or acquire ■■

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an asset, or accrue debts? Such a system is likely to be impractical; but it does highlight concern about the sharing of assets and debts within relationships.

Conclusion The main conclusion from this study is that assets and debts are not necessarily shared equally in couples. Nor do couples necessarily play an equal role in decision-making around assets and debts. Some policies, such as capital means tests within the social security system, assume that assets are a joint resource and this is an erroneous assumption, particularly, it seems, in relation to cohabiting couples. Issues around asset/debt ownership and decision-making within couples need to be considered further when collecting and analysing data on assets and debts and also when forming laws and policies in this field. These issues also need to be raised with the general public to encourage greater openness and understanding of financial issues to increase financial inclusion and well-being.

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Chapter 1 Introduction SUMMARY We know very little about how couples share, manage and make decisions about assets and debts. Any data on assets, for example, is rare; and even where it does exist, it is usually collected at the household/family level, potentially obscuring inequalities in access to assets between individuals. The main aim of this research was to explore how couples share, manage and make decisions about assets and debts. By ‘assets’ we are referring to financial savings, housing assets and pension assets. By ‘debts’ we are referring to credit use as well as ‘problem debts’, which may include difficulties paying bills and credit commitments. The literature review highlighted a number of issues including: the difference between legal ownership of assets/debts and perceived ownership; the difference between strategic control of resources and day-to-day responsibility for money management; that decision-making in couples is related a number of factors including the relative resources within the couple, social/gender norms, the quality of the relationship and so on. The role of life course changes (e.g. marriage and divorce) was also highlighted in the literature review. These issues were therefore explored in the interviews and also informed our choice of couples for interview. We therefore interviewed a mix of people in terms of age, relationship status, presence/absence of children and social class. We confined ourselves to working-age couples as the issues for retired couples were likely to be rather different. All of the couples were male/female couples though this was not one of our recruitment criteria. A total of 80 people were interviewed, in 40 couples. The interviews took place between April and June 2009 and both members of the couple were interviewed at the same time in different rooms by different interviewers.

Over the last 30 years, housing wealth has increased overall and has spread more widely among the population. At the same time, people have been increasingly expected to provide for their own financial security, for example through private (i.e. occupation and personal) pension provision. There has also been increasing interest in asset-based welfare, not least with the introduction of the Saving Gateway and Child Trust Fund. Yet despite all these trends we know very little about how couples share, manage and make decisions about assets. Data on

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assets is relatively rare; and even where it does exist, it is usually collected at the household/ family level, potentially obscuring inequalities in access to assets between individuals. The last 30 years have also seen an explosion in the use of credit and the recent recession has highlighted concern about people falling behind with their mortgages and other commitments. There has been quite a lot of research on problem debt; but, again, we know relatively little about how couples share, manage and make decisions about debts (see Goode 2009 for a recent exception). Based on in-depth interviews with 40 couples from a range of backgrounds, this research aims to help us to understand the dynamics of such sharing and decision-making in relation to assets and debts. By ‘assets’ we are referring to financial savings, housing assets and pension assets. By ‘debts’ we are referring to credit use as well as ‘problem debts’, which may include difficulties paying bills and credit commitments. This chapter begins with a brief discussion of the key issues, followed by details of the research aims, objectives and methods used in the research.

Ownership of assets and debts There is very little research on the ownership of assets and debts within couples. There is, however, some data on assets and debts across couples of different types. For example, Table 1 looks at how much money couples have within different types of financial savings (for example, building society accounts, ISAs, premium bonds, stocks and shares, etc.). It shows that 28 per cent of working-age couples with children had no savings at all in 2006/7 compared with 20 per cent of working-age couples without children. The vast majority of couples with savings had less than £10,000 though a minority had £20,000 or more (13 per cent of working-age couples with children and 20 per cent of those without). However, we do not know whether these assets are shared equally within the couple or one member owns a greater share. There is also a distinction to be made between formal ownership (for example, ISAs have to be held in one person’s name whereas a savings account can be in joint names) and perceptions, or even benefits, of ownership (for example, a couple may decide to save in one person’s name for tax reasons but consider the savings to be shared equally to the benefit of both parties).

In terms of a gender analysis, Westaway and McKay (2007) analysed the British Household Panel Survey (BHPS) and found that women were more likely than men to have savings accounts but their savings were worth less on average. The BHPS cannot tell us, however, whether women in couples had access to their partner’s savings and so benefited from them even if they did not legally own them. If we turn now to housing assets we find that in 2003/04, some 70 per cent of dwellings in Great Britain were owner-occupied. Tenure varies markedly according to the type of

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Table 1 Financial savings among couples Working-age couples With children (%)

Without children (%)

No savings Less than £1,500 £1,500–£2,999 £3,000–£7,999 £8,000–£9,999 £10,000–£15,999 £16,000–£19,999 £20,000 or more

28 26 7 14 3 6 3 13

20 21 8 16 4 6 4 20

Base

5,686

5,737

Source: Family Resources Survey 2006/7, Department for Work and Pensions (2008) http://www.dwp.gov.uk/asd/ frs/2006_07/index.asp, accessed 2 March 2009

household: four in five households comprising a couple with dependent children were owneroccupiers, most of which were buying with a mortgage (National Statistics 2005). We do not know, however, whether these mortgages are in joint or sole names and whether the equity in the home is considered shared at all. Unlike housing assets and some financial savings products, private pensions have to be held individually. Couples cannot jointly hold a pension, though one member can receive a dependent’s or widow/er’s benefits. When married couples divorce, private pension wealth is considered as part of the pot for division and so such wealth is considered joint in many cases, even if it is held individually. There has been considerable research into gender and pensions (see Ginn 2003 for an overview). Traditionally (and still to a large extent today) men have played a much greater role in the labour market than women. This has enabled men to build up far greater entitlements to state and private pensions than women. Women have then gained access to these entitlements through their status as wives. However, women’s increasing involvement in the labour market, together with reforms to the state pension such as Home Responsibilities Protection (introduced in 1978 as a way of crediting people for years spent out of the labour market caring for others such as children), mean that women appear to be reducing the ‘pension gap’ with men – at least as far as the state pension is concerned. The Government Actuary’s Department has estimated that by 2025, over 80 per cent of women reaching state pension age will be entitled to a full basic state pension, a slightly higher figure than for men (Department for Work and Pensions 2005). However, working-age men are more likely to be contributing to a private pension than working-age women (46 per cent compared with 38 per

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cent) and men’s level of contribution is higher. So men are likely to continue to have higher incomes in retirement than women (Department for Work and Pensions 2005). Research by the Department for Work and Pensions suggests that while many younger women are particularly keen to maintain financial independence through pension saving, traditional views of gender roles persist (Department for Work and Pensions 2005). This is backed up by Westaway and McKay (2007) who found that women start saving into pensions in the same way as men do, but end up with much smaller pension pots, presumably due to lower earnings and to taking time out of the labour market to look after children. This section of the report has so far dealt with assets, but we are equally interested in debts. In a recent review of qualitative and quantitative evidence on ‘over-indebtedness’ Disney et al. (2008) concluded that loss of employment (including small business failure), marital breakdown and poor financial management by the household were the main triggers for overindebtedness. Long-term low income was also responsible, among a group of families, for more persistent problems in making ends meet. In terms of the extent of over-indebtedness, the Department for Business, Innovation and Skills (2009) stated that, at the end of 2008: 220,000 people were in three-months arrears with their mortgage at the end of 2008. 15 per cent of the population had fallen behind with a bill or credit commitment in February 2008 and roughly two-thirds of those in arrears were more than three months behind with their payment. More recent economic trends are likely to increase the proportion of people with debt problems.

Making decisions about assets and debts There is very little research on decision-making and management of assets within couples. This contrasts with the substantial body of research on how couples manage income within the family (Pahl 1989; Vogler and Pahl 1993; Burgoyne and Morison 1997; Goode et al. 1998; Rake and Jayatilaka 2002; Burgoyne et al. 2006; Vogler et al. 2006; Sung and Bennett 2007). These studies on income have highlighted different forms of money management, with joint pooling of income being most common but with an increasing proportion of couples opting for more independent forms of management (Vogler 2009). Independent management and partial pooling are more common with higher income couples and with cohabiting couples (Vogler 2009). Some of these studies also make the point that responsibility for money management should not be equated with control of resources. Someone may have the dayto-day responsibility for managing money but not have equal access to the couple’s income. There is also a distinction to be made between strategic decisions (e.g. whether or not to buy a house) versus the more detailed decision (which house to buy). These studies have been very important in challenging the idea that money is always shared equally within couples to the mutual benefit of both parties (and to the benefit of children in such couples).

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There has also been some research on decision-making within couples around spending, borrowing and saving and this has tentatively suggested that men have more influence over major financial decisions such as taking out bank loans, saving and housing whereas women have more influence over spending on food, health and kitchen appliances (Kirchler et al. 2001). The authors of this study admit, however, that ‘although there has been much research into expenditure, empirical studies have largely ignored management of capital and assets’ (Kirchler et al. 2001: 71). A body of research on family decision-making more generally (Kirchler et al. 2001; Lee and Collins 2000; Challiol and Mignonac 2005; Hand 2006) suggests that the following factors are important in the decision-making process, including: ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■

relative resources within the couple; social/gender norms; emotions; attitudes, values and beliefs; the quality of the relationship; relative knowledge of and interest in the subject; past decisions; the presence and views of children/young adults in the family.

The research also suggests that we should not assume that couples go through a clear and rational process of discussion and decision-making. Hand (2006:71) reports from her research that in many cases: little negotiation or discussion takes place between partners. Instead, understandings and assumptions built up over time have been found to form a basis for the arrangements that are put into place.

Money and the life course Ownership and decision-making in relation to assets and debts within couples is clearly linked to the life course. For example, BHPS analysis (Westaway and McKay 2007) indicated, in line with some previous research (Sykes et al. 2005), that men tended to take on more financial responsibility in couples after marriage, with men becoming more likely than women to save and also more likely to take on debt. Married couples appear to be much more likely to manage their income jointly compared with cohabiting couples, who are much more likely to manage their income independently (Vogler 2009). Assets and debts may be held in individual names during marriage; but when marriages end, divorce law assumes that assets and debts are shared equally unless other factors are relevant (such as the marriage being very short, one partner bringing substantial levels of assets or debts to the marriage and the care of children requiring one partner to have a greater share of any assets). Westaway and McKay (2007) found that women who divorce suffer disproportionately compared with men in terms of savings and debts. However, their study did not analyse

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housing assets and Warren et al. (2001) found that single women who were separated or divorced had higher levels of housing wealth than single men who were separated or divorced. Westaway and McKay (2007) also found that women who experience cohabitation breakdown suffer even more than women who go through divorce (and more than men who go through cohabitation breakdown), perhaps suggesting that marriage provides some financial ‘protection’ for women, compared with cohabitation. But Warren et al. (2001) show clearly that women with the highest levels of assets are those who have never been married. Those with the lowest levels are lone parents. So partnerships and children seem detrimental to women’s finances. Having said this, there is likely to be a ‘selection effect’ here: women with the greatest opportunities to accumulate wealth are less likely to partner and/or have children. The issue of pension sharing on divorce has become increasingly important, with pension sharing orders introduced in 2000 in England and Wales (Price 2003). However, there appear to have been very few pension sharing orders. Ministry of Justice (2009: 97) figures show that in 2008 there were 10,417 pension sharing orders made, less than 10 per cent of the 123,000 divorces in the same year. Of course many couples will have no private pension wealth to split, others may have similar amounts and others may trade off housing wealth for pension wealth, as women appeared to do before pension sharing orders were introduced (Arthur and Lewis 2000). But why this is the case, and whether or not it is in their best interests, is not clear. These provisions only apply, of course, to married couples or civil partners. Cohabiting couples are not covered in pension sharing legislation though the Law Commission (2007) has recently recommended that certain cohabiting couples might be treated in the same way as married couples in law. Debts may also be divided on relationship breakdown and previous research by Kempson (2002) showed a correlation between relationship breakdown and being in arrears, a phenomenon sometimes referred to as STDs (sexually transmitted debts). Furthermore, the study showed that debt problems were much greater for women after separation than they were for men. For example, 18 per cent of divorced women and 23 per cent of separated women were in arrears, compared to 12 per cent and 16 per cent of men respectively. Bull (1993) argued that responsibility for joint debts may be left with women following relationship breakdown because they are more likely to stay in the same home while the male partner leaves. This makes it easier for the man to avoid creditors. Relationship breakdown is increasingly common, as are re-partnering and re-marriage. Repartnered couples may bring assets and/or debts to their new relationship and this may affect how they share and make decisions about finance. It may also affect views about marriage. Burgoyne and Morison (1997) carried out semi-structured interviews with 20 re-partnered couples (15 married and 5 cohabiting). The study found that these couples were more likely to keep their money separate than those in first marriages. In part, this was a response to negative experiences of sharing in first marriages (for example, through having a spendthrift or controlling partner or having difficulties agreeing on a division of assets when the marriage ended). For those with children from previous relationships, the desire to keep finances separate was particularly pronounced in relation to future bequests. Vogler’s quantitative analysis (2009) found that there was a difference between re-partnered couples depending on

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whether or not they were married. Re-married couples were more likely to jointly manage their money than re-partnered couples who were cohabiting. Another key turning point in financial trajectories is childbirth (Westaway and McKay 2007), with mothers typically working part-time and so reducing their ability to contribute to savings, mortgages and private pensions while fathers become even more likely to do so. As couples get older and accumulate assets, the question of wills and bequests becomes important. The extent of agreement over wills and bequests may signal the strength of the relationship but may be more difficult in couples with children from previous relationships. At present, the law on intestacy makes a major distinction between married/civil partnered couples and cohabiting couples though a Law Commission (2009) consultation document has suggested reform to give couples who have cohabited for some time the same rights as married and civil partnered couples.

Research aims, objectives and methods The main aim of this research was to explore how couples share, manage and make decisions about assets and debts. Within this overall aim, the project investigated: ■■ ■■ ■■

how assets and debts are distributed within couples; how couples manage and make decisions in relation to assets and debts; how all of this affects financial well-being within couples.

Table 2 Characteristics of the 40 couples included in the survey. Total number (of which, number with dependent children) Couples in: first cohabiting relationship first married relationship subsequent cohabitation subsequent marriage

10 (4) 11 (7) 9 (5) 10 (4)

Couples with youngest member: In their 20s In their 30s In their 40s In their 50s

7 (2) 11 (6) 15 (12) 7 (0)

Chief wage earner: Professional/senior manager Middle/junior non-manual Manual/out of work

11 (8) 16 (10) 14 (2)

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By ‘assets’ we are referring to financial savings, housing assets and pension assets. By ‘debts’ we are referring to credit use as well as ‘problem debts’, which may include difficulties paying bills and credit commitments. The literature review highlighted the role of life course changes. Other factors, such as income and employment status, are also important in relation to assets and debts. These factors were therefore explored in the interviews. They also informed our choice of couples for interview and we therefore interviewed a mix of people in terms of age, relationship status, presence/absence of children and social class. We confined ourselves to working-age couples as the issues for retired couples were likely to be rather different. All of the couples were male/female couples though this was not one of our recruitment criteria. A total of 80 people were interviewed, in 40 couples. The characteristics of the couples are shown in Table 2. The research involved in-depth interviews of the couples, with both members of the couple being interviewed at the same time in different rooms by different interviewers. This method has been employed on previous studies of income management in couples and enables respondents to be relaxed and open about their attitudes and practice in relation to finances (for example, Pahl 1989; Burgoyne and Morison 1997). Burgoyne and Morison (1997) argue that this approach also produces less disruption to the household, prevents partners conferring between interviews and provides greater security for the interviewer than visiting homes on her/his own. While there were few examples in our sample of people reporting to us things that they said their partner did not know, there were certainly many examples of people giving a different perspective on the same issue. Chapter 2 illustrates this in relation to men giving a more positive picture of finances than women. But there were also examples where members of the same couple gave a different perspective on an issue we might consider relatively uncontroversial, such as how long they had been together. In one couple the woman said that he had moved in six months ago, whereas the man told us it was two years ago. In another couple the woman told us that they had been together for 25 years; but when we asked him how long they had been together, he said, ‘On and off quite a long time. About 10, 15, 20 years, on and off.’ The interviews took place between April and June 2009, a time of recession when house prices had been falling, interest rates were low, and redundancies and unemployment had been increasing. Participants were recruited by a recruitment company that used a screening questionnaire designed by the authors to screen people in the street and then recruit for the study. Further information about the fieldwork is provided in Appendices I and II.

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Chapter 2 Ownership of assets and debts SUMMARY Formal ownership of assets sometimes differed from interviewees’ perceptions of who owned them. For instance, one member of a couple may have assets or debts in their name only, but consider such assets or debts to be shared. The other member of the couple may see things differently. Housing wealth tended to be split fairly equally within couples who were in their first cohabiting or marital relationship, and perceived as shared. But those who were in subsequent relationships were much less likely to consider their housing equity to be divided equally between them and their new partners. Views about pension wealth were more complex. People considered pensions to be individually owned, but when they thought about future pension income they tended to see this in the same way as current income. So if current income was shared, future pension income was also considered to be shared. Women in our sample were more likely to say they had problem debts (for example, arrears on household bills and credit commitments as well as struggling to make payments). Some female interviewees had been left with debts when previous relationships ended; some seemed to spend more than men (and get into credit card debt); and the women in this sample seemed to be more willing to discuss/admit debt problems than men in the interviews

Overview Levels, and types, of asset and debt ownership across the couples varied enormously, from professional couples with large amounts of housing equity and savings and secure pensions, to unemployed couples with no assets at all but plenty of problem debts. Most couples, of course, lay somewhere between these two extremes, with some housing equity, very small pots of savings, a frozen pension or two and some experience of debt problems in the past, if not now. This study is mostly concerned, however, with looking within couples rather than across couples. This involves looking at both formal ownership (for example, whose name an ISA account is in) and perceived ownership (whether the money in the ISA is considered to be joint or not) – see Burgoyne and Sonnenberg 2009. Some interesting issues emerged from the data in relation to asset ownership:

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O wnership of assets and debts

■■

■■

■■

■■

■■

■■

■■

An important distinction needs to be made between formal legal ownership of assets/ debts and how assets/debts are perceived by members of the couple. For example, one member of a couple may have an ISA in their name but the money in it may be seen as a joint resource. Housing wealth, in our small sample, tended to be (seen as) split fairly equally within couples who were in their first cohabiting or marital relationship. But those who were in ‘subsequent’ relationships were much less likely than others to consider their housing equity to be divided equally between them and their new partners. In most of these cases, women had more of a share of any equity than men as a result of previous divorce settlements (for example, trading off his pension wealth against equity in the home). Men in 13 of the couples seemed to have better pension provision than their partners but women seemed to have better provision than their partners in 7 couples. The remaining 20 couples had similar levels of private pension provision (which in 7 of these cases meant that neither had any). However, people were not always very sure about the level of their private pension coverage and so it is difficult to draw any firm conclusions here. Views about pension wealth, however, were complex. Pension products were certainly seen as individually owned in the formal sense, and this is unsurprising, as there are no pension products for couples. However, when people thought about future pension income, they tended to see this in the same way as current income. So if current income was shared, future pension income was also considered to be shared. However, there were no examples of pension-sharing orders among those who were divorced. In the majority of couples in our sample, each partner had similar levels of financial savings. In the remaining couples, levels of saving varied slightly within the couples but there was no clear gender pattern in our small sample. Women in our sample were more likely to say they had problem debts (for example, arrears on household bills and credit commitments as well as struggling to make payments). We think this is for three main reasons: some women had been left with debts when previous relationships ended; some women seemed to spend more than men (and get into credit card debt); women seemed to be more willing to discuss/admit debt problems than men in the interviews. ‘Relative resources’ in the couple, and marital status, seemed important in relation to the distribution of assets and debts within couples. These were linked to having children and to gender (because women tended to be the ones leaving the labour market and gaining housing equity from divorce).

It is important to bear in mind two methodological issues: first, this is a small qualitative sample and so we cannot generalise from our findings with any degree of statistical reliability; second, people may present their situations in different ways in interviews and there did seem to be a tendency for men to play down any financial problems, perhaps due to embarrassment or shame. It may also be possible that these men were not aware of their (and their partner’s) financial situation. For example, one of the more affluent couples in the study had lost thousands of pounds on shares that had all been invested in one bank. While the woman in the couple told the interviewer all about this very openly, the man never mentioned it to his interviewer. In another interview, a woman told us about her £7,000 credit card debts and

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estimated that her partner owed about £3,000–£4,000, but her partner did not mention any credit card debts. Both women said that their partners knew about these financial matters. The rest of this chapter goes into more detail about the ownership of different kinds of assets and debts within the couples interviewed.

Housing assets Most of the couples interviewed (32 out of 40) were owner-occupiers. The remaining 8 were mostly in social housing and were either unemployed or in low-paid, low-skilled, insecure work. While the renters had no mortgages or equity to share, there was sometimes an issue about whose name was on the tenancy agreement where one partner had moved in with another. Some members of couples were wary about adding their (new) partner’s name to the tenancy agreement in case the relationship did not work and they would then have to leave their social housing. Most of the owner-occupiers had joint mortgages and most considered any equity in the home to be equally shared. This was particularly the case with the couples in their first marriages and couples in their first cohabiting relationship. Most of these couples had put the same amount of money into the deposit for the home and were both contributing to the mortgage, though some women were contributing less because they were working part-time due to childcare commitments. One couple, for example, were in their fifties and had been together for 30 years. They had had a fairly traditional breadwinner/housewife division of roles and had now paid off their mortgage with inherited money from her parents, but nevertheless considered the equity in the home as equally shared. Another couple had bought their first home nearly 20 years ago. They had also had a fairly traditional breadwinner/housewife division of labour but in this case the woman had provided the deposit from a previous property. When asked if he now saw more of the equity as hers because of this, her husband said: I don’t really think about it, I just think everything’s everybody’s really, it’s all in the same pot … I suppose you could go through the process by talking about who put what in. I suppose you could say that you know if you were taking it individually I financed the other twenty thousand that went through but then again [she’s] looking after the kids and she’s at home and that’s sort of what her role is. Another couple were in their thirties and had married three years ago after living together for the previous 10 years. They had no children and both worked, though her work was better paid and more secure than his. They had bought their first home 10 years ago and used money from his redundancy pay to put down as a deposit. Even though he had put down this deposit from ‘his’ money, he said that they saw the equity in the home as equally shared: ‘everything is just down the middle’.

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Another (cohabiting) couple in their forties had only just started living together and owned their own properties. They were, nevertheless, planning to sell both properties and buy a new home together. The picture is rather different among owner-occupiers who had been in previous relationships. Those now cohabiting with a new partner were much less likely to say that they had equal shares of any equity. In some cases, this was because the relationship was relatively new and people were not yet financially disentangled from previous partners. For example, one young couple (in their twenties) had been living together in her home for about a year but the mortgage on the home was still in joint names with her ex-partner: We’re looking at getting it signed over because the last we heard, he isn’t interested in the money side of it, he doesn’t think they’ve made an awful lot if anything, and he just wants shot so he can take advantage of the housing market himself as a new buyer as it were. This couple had started a legal process to transfer the mortgage into the name of her new partner but the process was not yet complete. In another case, another woman (in her 40s) said that she was still in the process of transferring the mortgage on her home to become her sole responsibility. She had decided not (yet) to transfer the mortgage into her new partner’s name because she owned most of the equity and wanted to keep her financial independence: This is still jointly owned with me and my ex-husband. It’s took five years to come to this … there’s ten years on [the mortgage] but I’ve just gone in to bring it back up to sixteen, I think, because I’m having to pay my ex-husband off. So I’m just in the process of doing that at the moment … It will be in my sole name once I’ve paid him off … we [self and new partner] originally wanted to go into joint names but, one, he’s never had a mortgage, you see, because him and his ex-wife rented. So this is his first experience with me but I think part of it was I wanted to do this on my own because I’ve had a battle with my ex and I think it was just a bit of, I’ve done it. But once it’s in my name then we may very well get [my new partner] put on it because he’ll be paying it anyway. Her new partner gave us a slightly different picture of the situation, saying that the process of transfer was now over and that they were both now on the mortgage (though he did admit that the house was ‘mainly hers’). It’s joint between the two of us. [My new partner] and her ex-husband owned the house previously. And then she’s now divorced and we took the mortgage on together. So we’re now actually part mortgage, both on it. So we both own the house now … I was quite happy for her to say look, because I haven’t put anything into the house, that it’s yours if we ever split up, then I won’t ask for anything out of the house because it was your house originally and you’ve been paying for it for so long so I find that more fair.

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He went on to say: If … we’d been together for about five years … I’d walk away with my bills and debts and I wouldn’t … want nothing out of the house. This is like what we’ve both discussed like for instance if I left her in two years’ time or three years’ time we decided we weren’t compatible enough together, I’d walk away, leave her with the house, leave her with everything that’s in the house and I’d just start again. I’d quite happily do that. If it’s my decision to move away and do that then fine, if it’s her decision and she wants to get me to leave then I’d still do the same thing. I wouldn’t fight her for the house because I don’t feel that I’ve paid enough into the house to make it ours. If that sounds fair enough. Ours is not a representative sample, of course, but in virtually all of the cases where housing equity was not considered to be equally divided, it was the woman in the couple who owned more of it. This was largely due to previous divorce settlements where women had remained in the marital home and bought him out (sometimes trading this off against ‘his’ pension – see below). However, one woman’s story was rather different. She had been living with her partner (‘on and off ’ according to him) for a number of years in a council house when she decided, without his knowledge or participation, to buy it by herself: When I got this house, it was like, I was going to work because I’ve got to buy this house and it was a good price at the time. So to me, it was just like … didn’t consult [my ‘partner’], it was just go ahead, get it done because it was a good buy. So it was a one-off big decision … It was a new relationship at the time so … it was my decision at the time. Her independent decision-making seemed to reflect the lack of commitment in their relationship. In another case, a couple had been living together for five years in her home but the mortgage was still in her name only as she had built up the equity in the home and he had brought no money into the relationship. She was a well-paid professional woman and he had low-paid fairly insecure work. She was particularly concerned at the prospect of having to move or re-mortgage the home if he had a claim to it and they separated: It makes things simpler if I know that I’m responsible for the mortgage. We haven’t thought about his rights if we were to separate and we don’t talk about separating particularly. So it’s just easier for me to be in control of it. There was a more mixed picture among the couples who had been in previous relationships but had now married again. Most of these saw the equity in the home as joint even if one member of the couple had brought more equity into the relationship. For example, one man had been an outright owner when his new partner started living with him. She brought some money with her but it was far less than the value of the home. He said that he considered all their wealth to be shared equally now that they were married:

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We’ve been married eight years. Eight years this year. And we just whack everything down the middle. There’s no ‘she can live in the house until I die or until she dies’, none of that. However, not all couples were so willing to share their assets equally, even with a new husband or wife. One woman insisted on a kind of ‘pre-nuptial’ agreement to say that the house would remain hers if they separated. She had experienced various financial problems with her previous partner and wanted to keep control over her financial situation – not least to retain the family home for her children: I’d been in a situation where it was difficult to get out of. I had financial issues with my previous partner. So it wasn’t something I took on lightly [referring to taking on a joint mortgage/ownership with new partner] … I’ve got a legal contract drawn up that [the property] remains mine. I mean you never know what might happen. Unwillingness to share is only one factor here as one woman was willing to put her new husband’s name on the deeds but did not do so because he had accrued considerable business debts in the past and had not gone bankrupt. She was concerned that his previous debts might have to be paid from ‘her’ assets if he became a part-owner of the house. In another case, a couple in their fifties wanted to start buying a house together but could only get a mortgage if the man’s son’s name was on it too as they were considered too old. She said she was quite happy about this, as the house would go to him eventually anyway.

Pensions Whereas housing wealth was often considered to be joint and equal, views about pension wealth were more complex. Pension products were certainly seen as individually owned in the formal sense and this is unsurprising, as there are no pension products for couples, though there may be survivor’s benefits. However, when people thought about future pension income, they tended to see this in the same way as current income. So if current income was shared, future pension income was also considered to be shared. However, there were no examples of pension-sharing orders among those who were divorced, which is not surprising given that these are made in less than 10 per cent of divorce cases (see Chapter 1 above). Half of the couples seemed to have similar levels of pension provision – in some cases neither person had any private pension. In the other half of couples, men in 13 couples seemed to have better private pension provision than their partners but women seemed to have better provision than their partners in 7 couples. Having said all of this, it is difficult to judge relative levels of pension wealth because people were very unsure about how much they might have in private pensions. This was partly due to the fact that many people had, at one time or another, paid into a company pension but many of these were now ‘frozen’ when they moved to different jobs (see the long quote in Appendix III, which illustrates the complexity and confusion around pension wealth ownership). One woman said that she did not have any pensions but then said she had frozen pensions.

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I haven’t got pensions, I’ve got frozen pensions … I’ve got about four frozen pensions which are linked up somewhere and they will give me an income, how much I don’t know. But they will give me an income. One woman had a frozen pension and was currently paying into another pension but, I don’t know what I’ll get, I haven’t got a clue what I’d get from this one. And again, whenever they send anything from this … pension it is written in such a way that I cannot understand what I’ve read. When asked if she had a private pension, another respondent answered: I don’t know a great deal about it. We do have a pension plan. My husband knows more about that ... I don’t know. I don’t know anything about that. The interview with her husband revealed that he saw their businesses as their pension but they also had very small personal pensions (paying around £30 per month), but he said, ‘We don’t believe in pensions so we’ve never had pensions as such. We just had the minimal requirement.’ In one young couple, the woman had said that her partner did not have a private pension and he confirmed this at first when he was asked if he had a private pension. I haven’t. [My partner] pays into a pension … oh yes I have. Sorry. Just started because I’ve been with the business a year so it’s only the last four or five months I’ve actually started paying a pension. In another couple, he said that he did not have a pension whereas she thought, He’s probably got … because he worked for [the public sector] so he’s probably got a pension from that. So it’s probably about three or four years he worked for them. In some couples, current pension provision was clearly unequal but future pension income was generally seen as a joint resource. For example, in one married couple she was in a relatively secure, well-paid job as a teacher and had been paying into a final-salary occupational pension for over a decade. During that time he had been made redundant twice and was in a less secure job in manufacturing without any pension provision. He regretted his lack of pension provision but reported: She’s said … her pension will be our pension which is nice of her. In another couple, the woman had some previous private pension provision but she had taken time out to look after their children so it was not as good as her husband’s final salary scheme, which he had paid into for just over 30 years. He said:

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She’s certainly looked into making sure she can get her state pension up to where it would need to be, because having time off not paying stamp when she had the kids and what have you. But we tend to live on my salary anyway and I think because of it being final salary and the debt being out of the way by the time I retire, the kids being out the way by the time I retire, then we believe that mine should be enough with [the money from my partner’s frozen pension] ... she’s got 12, 14 years in and a state pension, there’ll be enough there. Although couples tended to see their potential pension income as shared, there were no examples of pension sharing orders among those who had previously divorced. Some women stated that they had explicitly traded in their entitlement to ‘his’ pension in return for more housing equity, but one woman at least had mixed feelings about this: My ex-husband’s got a very good pension, but I was never involved in that. So to go for half of his pension would be quite a bit of money for me, but he was going to go for half of mine which I haven’t got … so now I haven’t got anything like that but I wish I had of done, I do wish I had of done … he’s backed down on this house, so I’ve only got to pay him a certain amount so it’s sorted that way, so he’s keeping his pension. Another woman who had been a full-time mother to five children also traded in her right to her ex-husband’s pension in exchange for more housing equity. She felt that this had been a good deal but did not take any legal advice on it: I would have had a share of my ex-husband’s pension but he was very clever … he said if I did he’d make my life even more difficult and it was very difficult. We actually did the divorce privately and people, and many people in my family said he’s going to take you for a ride. But in actual fact in the end I probably came off best because I stuck to my guns. He was very vindictive, very … So I actually came out of it very well in the end. Another divorced woman had relinquished any claim to her ex-husband’s pension because she felt guilty about the relationship ending: It was me that left my husband and he was very bitter. And trying to get your money from somebody who doesn’t really want to speak to you is very difficult and I must admit it was hard … I always worked and I always put in so I felt that I was … I had to have something. The only thing I didn’t do was take anything out of the house so he was left with all the furniture, I never took his pension, I never did anything like that … a lot of people do and can do. So to me I was like I just need my portion of the mortgage. But it still could have been very difficult to get that had it not been that his parents had died. Many couples reported that they had little private pension wealth. Of these, about half were very concerned about this and wanted to improve their pension provision in the future. The other half felt that private pensions (both personal and occupational) were risky compared

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with other forms of investment. Contrast the views of these respondents when asked if they had a private pension provision and how they felt about that: No, I don’t. It’s really bad, I should but you know, I have had a pension before and it’s actually with a company, its frozen now. But I do, it’s not something that’s been a priority, which I know it should be because I’m not getting any younger, but it’s just the case at the moment, it’s the last thing on my mind. Hopefully, you know in the next few years, it will change and I will be able to put a bit away but… I’m not sure I think it’s a good thing in the long run because you never know if the company’s going to be there … It’s a gamble. And it shouldn’t be a gamble. My views towards it are, yes I actually need something for when I retire, but the way things are at the moment and the way pensions are going at the moment, I’m thinking to myself, well is it really worth it at the moment? For many couples in this position, housing wealth was mentioned when they were asked about pension provision: We’re probably looking into moving into something like an old people’s flat or whatever, there’s some nice ones in [suburb name], on the outskirts there. And you look at that and you think well if we spend £90,000 on moving into those and you’ve still got £40,000 left you could put that into like a savings account and live on your pension and a little bit off your savings.

Savings There were varying levels and types of savings across and within the couples. Six couples had no savings between them at all. Among a further nine couples, one partner had no savings and the other had very little. In the remaining couples, levels of saving were generally low and both members of the couple had similar amounts. Some of the professional couples, however, had large savings portfolios. For example, one professional married couple in their 40s had savings accounts, ISAs, premium bonds and stocks and shares. They both had a considerable amount saved but had made a conscious decision to do this to make up for the shortfall in their endowment mortgage (projected to be £18,000 shortfall in seven years’ time). Previous research (see Kempson and Finney 2009) has identified different types of saving among low-income households, drawing a distinction between ‘rainy day’ saving which is accumulated just in case it might be needed at some future point and ‘instrumental’ saving which is often for a specific purpose. This distinction appears in our sample too. However, it was not always a clear distinction. For example, many couples were saving for their children, which seems reasonably instrumental, but they had no specific purpose in mind – so should this be considered ‘rainy day’ or instrumental savings? Other couples, typically the more middle class couples, said that they were saving specifically for children’s tuition fees – clear instrumental saving.

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Savings patterns were linked to the life course, with some cohabiting couples saving for their wedding (instrumental saving). Couples with children, as noted above, were often saving for their children. Indeed some said that they had no savings themselves but that their children did. Christmas and holidays were other common triggers for instrumental saving, particularly among couples with children. Older people were much more likely to have accumulated some savings and be holding them in case of future need rather than for a specific purpose. Our sample also includes some affluent households and we identified another type of saving that we call ‘sunny day’ saving. This is saving that is for no specific purpose but takes place because the couple simply has money left over after all their outgoings, and so they save it. It becomes a fund that can be drawn on for positive spending rather than as a way of meeting unexpected future need (as is more the case with ‘rainy day’ saving). In terms of the distribution of savings within couples, people often talked about savings as joint even if the savings were individually owned. Some products, such as ISAs, have to be held individually and cannot be jointly owned whereas some bank and building society saving accounts can be jointly or individually held. So the distinction between formal and perceived ownership was therefore an important one. For example, one member of a couple used the first person plural ‘we’ to talk about some shares that ‘they’ had bought: We’ve bought some shares in [a bank], but obviously the price dipped down to quite a low level compared to what it was previously so, we invested some money in that. The interviewer then asked him to clarify whose name the shares were in, to which he replied: I don’t actually know that [laughs] ... I think they probably are [all in her name] to be honest … [so] I suppose [I don’t own any shares], not really if they were in her name. Some couples, however, took a more individual view of savings. The man in one couple, for example, felt that it was not necessary to disclose to their partner the amount they had in savings. They had been living together for five years and when asked about whether they talked about their respected savings he replied: We wouldn’t think that was our business to be honest … I mean, yeah, we both treat each other and help each other out if needs be … but how much is in there – none of her business [laughs]. Others were only ‘sort of semi-aware’ of what their partner had: [My partner’s] got her own [savings] and I’m sort of semi-aware of what’s in there and probably the same with mine, [she’s] sort of aware because we talk about it, she knows I’ve got Premium Bonds, she knows I’ve got ISAs, she knows I keep stocks and shares but in terms of coming down to the last penny and all of it that’s in there, we wouldn’t know.

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There were only a few examples of couples where one member had substantially more than the other (not least because levels of saving were generally quite small). In one married couple the woman had much more saved than the man because she had a more secure, much better-paid job. She was working full-time and they had no children. They had savings in savings accounts and ISAs and although she had more than him in savings, he was still accumulating fairly substantial amounts by saving £100 per month in his ISA.

Borrowing and debt As mentioned above, levels and types of borrowing/debt varied between the couples. Those out of work or in low-paid jobs were much more likely to have fallen into rent arrears or debts with their council tax or utility bills. Problems repaying credit commitments were more common among those who were working. Women in the couples in our sample were much more likely than men to talk about problem debt. This seems to be for three reasons: Some women had been left with debts when previous relationships ended. Some women seemed to spend more than men either on joint or personal items (and so get into debt). ■■ Women seemed to be more willing to discuss/admit debt problems in the interviews. ■■ ■■

One woman was left with arrears on utility bills when her ex-partner left their home: The bills that we had together then, because they were all in my name, he upped and left and I was left with the debt. So I was still paying that off for a good few years. Another woman said that her ex-partner had encouraged her to buy things on her credit card and then left her to pay off the debt when they separated: We were buying things and, you know, he’d say, ‘Get this, oh put it on your card’, and then when we split up it was all my debt and not his. A man in another couple gave his view of what happened when his previous relationship ended: About six months prior to being separated it sort of come out that she’d been spending a lot more than what I thought she had. And as soon as we divorced, we separated, there were letters coming through the door saying [ex-partner] owes us this much, she owes us this, this and this. And at the end of the day all I just said look, she no longer lives here, this is her address go to her and find the money from her, not me. And that’s what they did. And luckily enough I had nothing to pay out. I kept my side sort of clean.

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Sometimes women were spending more on joint goods and sometimes on personal goods. One woman admitted to getting into problems due to excessive spending on consumer goods for herself but she said she had now learned her lesson: I’ll make sure that I won’t buy things unless I know I can pay it back the next month so I am really ... like I said, I’ve learnt the hard way. Now, I think it’s the best thing that’s happened because now I’m really, really good with money. Her (cohabiting) partner was quite harsh about this: I knew that from student days she went on spending sprees thinking she was earning a wage and going out buying designer tops here, there and all this sort of stuff. And I know from talking to her dad that she got some money on cards that they ended up having to sort out for her; she’s paid him back since … but she’s been re-educated … I’ll just say it as it is … ‘If you want to start doing all that, you can’t do it under this roof!’ … And her dad’s given her a right rollicking about it. Although women seemed to have more debt than their partners, this might also be due to women being more likely to mention debts in the interview situation, compared with men. For example, one woman in a cohabiting couple said that she owed about £7,000 on credit cards, which had mainly gone on paying for furnishings for their home. She was paying the minimum off each month but would have liked to be able to clear them. She was not using credit cards any more and wished she had never had them. She said that she thought her partner owed between £3,000 and £4,000 on his credit cards. He said that he did not use credit cards and had never had any problems with them. He did say that he used an overdraft facility and when asked if she used one he replied: She uses her own, obviously, nothing to do with mine. Her partner may have said that her credit cards are ‘nothing to do with me’, but she used her cards to buy furniture for their home rather than for personal items for herself alone. This could either be an abrogation of his responsibility or perhaps she was buying things for ‘them’ that they did not entirely need. Another couple had no assets but considerable debts. The woman told us that they were up to their maximum limits on credit cards and paying off the minimum each month. They were also paying off personal loans for a car and home improvements as well as having hire purchase for a sofa and seven doorstep loans to pay bills. They had consolidated some of their bills and loans through an agreement with Secure Homes. She felt that she was in a vicious circle of debt and was clearly anxious about it. She said that she had talked about this openly with her partner, but in his interview he only mentioned the car loan and the consolidation loan and said they did not have any problems. Another couple had fallen behind with their council tax and rent payments. The woman said that these were joint debts and that he knew all about them but he said that he did not have any debts and, when asked if she had any, he replied:

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I don’t think she’s got … well, as far as I know, she hasn’t got any debt. Another woman had stopped using credit cards after having got into debt with them previously. She felt that her partner had some difficulties with them: [My partner] has got two credit cards, I think. And no, he’s not the best at managing credit … I got rid of all mine because there was no chance I would spend money on them. And you do survive without them. You think you’re not going to but you do. There are things you can’t do but then if you haven’t got the money you shouldn’t do them anyway. And [my partner] is not the best at keeping track of what he’s doing. He said he was quite comfortable with his use of credit cards and tried to pay off the full amount each month if he could. It seems, from this small sample, that men are either generally more relaxed about financial problems or less willing to admit their anxieties and concerns, perhaps due to feelings of shame if they feel they are failing to provide a strong financial base for their family.

Explaining variations in ownership of assets and debts This is a small, qualitative sample, but when analysing patterns of asset and debt ownership across the couples, it is clear, in line with previous research, that socio-economic factors were of primary importance. Those couples with secure, well-paid jobs were much more likely to have substantial housing and private pension wealth as well as considerable financial savings. Those out of work or in low-paid, insecure work had very few assets and, typically, more problem debt. Having said that, a number of couples in reasonably secure work had relatively few assets apart from their home, and had accumulated credit commitments at some point that they had found difficult to keep up with. Age was also a factor across couples, with older couples having had time to accumulate more wealth, in line with lifecycle theory. When analysing patterns of asset and debt ownership within couples, socio-economic factors, or ‘relative resources’ were also important. Most couples comprised members with similar socio-economic status. This is what we would expect given the widespread phenomenon of ‘assortative mating’, i.e. where people get together with partners from similar socio-economic backgrounds. But there were some couples where there was a considerable difference between them. For example, a woman in one couple had a very well-paid professional job whereas her partner was in and out of manual work. They had been together about five years and kept their finances fairly separate. She considered the housing equity in ‘her’ home to belong exclusively to her and she had an occupational pension whereas he had no pension. Neither of them had much money in savings. Another couple, with a similar difference in occupations (her job was professional and his non-manual), took a much more equal view of their assets. Perhaps one explanation for the difference here was that this second couple was married and in their first relationship whereas the other couple were not.

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A more common example of socio-economic variation within couples was when men stayed in work while their partner took time out to look after children. While the housing equity was still joint this could sometimes mean that he accumulated more savings (where they had separate accounts). His pension contributions were also accumulating, though many couples saw the eventual income from these as being joint. And while women’s pension provision suffered from their childcare commitments, some women seemed to have more secure, public sector jobs (for example, in the NHS), which gave them access to good occupational pensions. Some men’s jobs, often in the private sector, seemed less secure and the pensions were poorer value. The relative socio-economic status of partners within a couple did, therefore, seem important here. Marital status also appeared to be linked to the distribution of assets and debts within couples. Couples in cohabiting relationships, particularly those in subsequent cohabiting relationships, often saw their assets in a more individual (and unequal) way. In some cases, the woman seemed to have more housing equity because of a previous divorce settlement. But this could be at the cost of her future pension income. There may be some link between the length of a relationship and cohabitation/marriage. Perhaps some cohabiting couples had more individual ownership because the relationship was still at an early point compared to married couples but while this is likely to be a factor, there also seemed to be something independently important about marriage as opposed to cohabitation. So ‘relative resources’ in the couple, and marital status, were relevant in explaining variations in ownership. These were linked to having children and to gender (because women were the ones leaving the labour market and gaining housing equity from divorce).

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Chapter 3 Making decisions about assets and debts SUMMARY Decision-making in couples is a complex process and not one that can be easily divided into particular approaches. Although we have identified a broad typology here, there is overlap between some of the approaches. Also, couples’ approaches to decisionmaking varied depending on the subject. With those caveats in mind, couples generally seemed to fall into one of four types:

joint decisions were made; one partner played the lead role; decisions were made independently by one or both members of the couple; ■■ no decisions were made on assets and debts. ■■ ■■ ■■

This is a small, qualitative sample, but there did seem to be a link between relative resources within the couple and decision-making approaches. Marital status also seemed to be linked, with cohabiting couples in our sample generally more likely to make independent decisions about assets and debts than married couples.

Overview This section provides some examples of general approaches to decision-making before focusing on variation by different asset/debt types. It is worth pointing out that although we are not reporting on management of income and expenditure in the couples, this often went alongside asset and debt management. It was unusual for the couple to have one approach to income/ spending and another for assets/debts. It is also worth stating that virtually everyone interviewed said that they generally agreed with their partner over money issues. Sometimes they admitted that one partner was perhaps more of a spender and one more of a saver, for example, but overall, they mentioned very few clear disagreements. This could be for a number of reasons: perhaps couples with major disagreements over money separate and so are more difficult to find for interviews; perhaps couples with major disagreements are reluctant to take part in research about money issues; perhaps those who do take part wish to present a united front to researchers. It is likely to be a combination of these explanations and previous researchers have also suggested that

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if relationship dynamics and conflict are to be investigated then other methods such as observation may be more appropriate. However, while there were few examples of major disagreements, there were clear discrepancies in how different members of the same couple saw their financial arrangements, as we saw in the previous chapter and as we will also see in this one. Decision-making in couples is a complex process and not one that can be easily divided into particular approaches. Although we have identified a broad typology here, there is overlap between some of the approaches. Also, couples’ approaches to decision-making varied depending on the subject. For example, there was much more joint decision-making around housing assets than around pension assets. It is therefore difficult to categorise couples, overall, in terms of their decision-making approach. Nevertheless, and with those caveats in mind, couples generally seemed to fall into one of the following types: Joint and equal decision-making In these (5) couples, people said that joint decisions were made, with both partners playing an equal part in the discussions and decisionmaking. ■■ Joint decision-making but with one partner leading In these (20) couples, one partner played the lead role in making decisions for the couple. Sometimes this would involve discussing options with the other partner but sometimes the lead partner would be ‘delegated’ the authority to make decisions without much consultation or discussion. ■■ Independent decision-making In these (11) couples, decisions were made independently by one or both members of the couple, usually with little discussion between the partners. ■■ No decision-making In these (4) couples, no decisions were made on assets and debts. This did not necessarily mean, however, that there were no discussions on these issues. ■■

Some couples (5 in the sample) told us that they carried out joint and equal decision-making. One couple told us: We’re at home all day together, because [my partner] works at home and through circumstances I’m at home, and so bills and whatever hit the mat and we see them together and we go through the bank statements and credit card statements together. This couple had also talked about pensions on various occasions and had both decided that they could not afford to take out private pensions and would have to come up with ‘creative’ solutions themselves. But relatively few couples reported getting together regularly to discuss housing, pensions, savings, credit and debt and then make decisions on these in a very equal manner. It was much more often that one member of the couple would take the lead, though the resulting decision would be seen as joint (this was the case for 20 couples in our sample). For example, in one couple the male partner clearly played a leading role in relation to money. In deciding about their mortgage, for example, she said:

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I think he did all the shopping around and then we sat down and agreed to what we wanted and went ahead with that one. She said she was happy to ‘pass it on to him and let him deal with it’ because: He does like to go into detail so I leave him to do it and get on with my other things. I don’t want that responsibility. A similar process occurred with decisions about buying and selling stocks and shares within this couple: Yes, he discusses it with me and then I go along with him thinking it can’t do any harm at the time. And in relation to pensions: Yeah, we would decide ... he would tell me about it and then he’ll say, yes, we’ve made a decision. The woman in this couple knew very little about their finances but said she was happy to ‘delegate’ this to him and he seemed happy with this arrangement too. The man in another couple also took the lead with decision-making. In relation to savings: [He] would do all the groundwork and say look, what do you think about this? And what do you think about that? He told us: I got the impression that [she] needed somebody to take charge of her financial side and she was quite willing to sort of leave me to it. These couples were examples of male-led decision-making (of which there were 10 in the sample) but there were a similar number of couples where decision-making was female-led. For example, the female partner in one couple told us that: I just do it and [my partner] just goes along with it. He seems quite happy. I’ll always talk to him beforehand and say, what do you think about this? But he does just let me get on with whether we save this much, we spend this much. And in another couple: [He] probably won’t have much of a clue on where his money is because I tend to deal with most of it.

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And another: Yes. To answer all your questions in one fell swoop I do all the finances. In another couple, she explained: I’m the boss of the household … If it was left to [him] we wouldn’t get nothing done. [Laughs] … He’d say the same. He said that she would make the final decision on financial matters: Basically because me working a lot, I just kind of come home and expect everything … well she does it basically, she’s like a little version of my Mom. She does everything, kind of pays all the bills… Although one person in these couples was taking the lead, they were not always taking the lead on their own. This is because a number of people relied quite heavily on informal advice from other family members (for example, their own fathers) or on financial advisors. For example, in one couple in their thirties, the woman took the lead in financial matters but with help from her dad: My dad’s very clever and so he understands all the ins and outs and whatever. And I probably, I’ll listen to it but I couldn’t explain it to someone else. And you feel a bit out of your depth then don’t you? … What I really want to do is go to him and say , ‘Oh dad, I need a pension, what should I do?’ And for him to say, ‘Do this.’ Whereas he feels the need to tell me all my options and then see which decision I want to make. Her partner also mentioned his father-in-law’s influence on their choice of mortgage: That was down to [my partner], her dad had a lot of influence because he knows a lot about business and all, mortgages and that sort of thing. So it was probably taken on his advice to go for this mortgage. When asked if they shopped around for the best deals on gas and electricity, etc., he said: With a bit of help from her dad … Because her dad’s always on the Internet and he’s always getting oh, if you go to this web page have a look there and…he’s very good. There were a number of other couples, however, where there was little joint discussion and decision-making (11 couples). Each member of the couple approached assets and debts independently. There is clearly some overlap between these couples and the couples where one partner took a lead in making decisions but the difference is that in the female and male-led couples, the leader was making decisions for the couple as a whole whereas in the more independent approach, people were making decisions for themselves. In some cases,

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both members of the couple were making independent decisions but in some cases only one member of the couple was making active decisions, with the other not really thinking too much about such issues. For example, in the previous chapter we referred to a woman in one couple who had decided to buy the council house she was living in without even mentioning it in advance to her partner. This is perhaps the most extreme form of independent decisionmaking in the sample. Another example from the previous chapter was the couple in which the man said, slightly tongue-in-cheek, it was ‘none of her business’ how much money he had in savings. Although this chapter is exploring different approaches to decision-making, one of the findings is that some couples were not making any decisions at all (4 couples). One couple had been together for 14 years but had not (yet) discussed pensions with each other: No, that’s one thing we haven’t spoke about. But probably will when you leave here! She said that they had talked about savings but had not taken this forward because they had no money to save: We do talk about it but we’re in the process of paying off other stuff first before we can start saving, really. The man gave a slightly different picture, suggesting that they did not talk about it much at all: To be fair, me and [my partner] are terrible. We don’t look at saving; we just enjoy ourselves.

Housing assets The decision to buy a house is a major one, and was generally taken with much discussion between partners, far more than any other decision around assets or borrowing/debt. The first stage of this decision is whether or not to buy at all, then how much and where/what and then with which kind of mortgage, including whether or not it will be joint. There is also a decision to be made about who contributes how much to the mortgage. Subsequent decisions to move home or change the mortgage also generally involved considerable discussion and active decision-making, as one of our interviewees explained: It’s always a joint decision, we would never do anything on that scale without discussing it. In other couples, one member of the couple would take the lead. For example, one woman’s partner worked in a bank and he made all the decisions about their first mortgage: Yeah, yeah he sorts it out and I just sign on the dotted line.

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And another commented: I haven’t got a clue, he does all that. In another couple, the man told us: I don’t [discuss the mortgage with her] at all. She just knows that; I might have mentioned that the mortgage is on interest-only for six months, until we get straight again, but I don’t think she quite understood what it [meant] you know ... And, indeed, when we asked his partner what kind of mortgage they had, she admitted: I couldn’t tell you, I don’t know, to be honest, I don’t know. These are all examples of male-led decision-making on housing but there were similar examples of female-led decision-making too. One woman worked for a solicitor and this gave her some access to information about financial matters, which led to her playing a lead role in financial decision-making. Another woman told us: Yeah, I probably take the lead. We do make joint decisions but I’m probably the leader in terms of the joint decision.

Pensions There was much less discussion on private pensions than on housing wealth. This is not surprising, perhaps, because decisions on housing assets are triggered when buying a home, moving home and re-arranging mortgages. Furthermore, most mortgages in our sample were joint mortgages and so involved both members of the couple. Private pensions, however, are rather different. They can only be held individually, not jointly, and if people stay in the same job with the same pension there is little to discuss. When we asked one man whether he discussed pensions with his partner he replied: Not really, because once it’s done it’s done. It just carries on. Even the initial decision to join a private pension scheme is sometimes seen as automatic rather than something that people have a choice, or a decision to make, about. As one man said: I didn’t have any choice, it just came with my job Some couples, however, had discussed and made decisions about pensions: We’ve just chatted and because he’s had a small pay rise he’s put that difference into … he’s upped from 3 per cent to 4 per cent just this month … And we talked about that and filled the forms in.

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We do. It’s one thing, we might not do it often but it will come up about three times a year. Usually when we’ve either got more money or are getting a pay rise, we always turn round and say we should not spend the difference, we should put the difference into a pension plan. Another couple had discussed pensions but this had been some time ago. She said: Yeah, we have talked a little bit, making sure that we’re okay. Because [he has talked] about possibly changing jobs but because of the benefits of having the pension ... [he decided to stay] When asked if they discussed pensions he told us: Not at all. Last time we probably discussed it would have been five or six years ago. In another couple, the partners did have some pension provision but, again, rarely talked about this: We don’t really, no we don’t discuss them a lot to be honest. No, not really, if we do it’s in a humorous way. Because she’s slightly older than me so I always say I can’t wait until we’re spending your pension. Even where there might be something to talk about, pensions were often seen as an individual matter: We don’t really talk about it, to be honest. If I got a pack from work, say, and I was to request it and a percentage was to come out my wage he wouldn’t know about it unless I said ‘Oh I’ve set up a pension today’ but I would tell him but he wouldn’t know. In some couples, there seems to be little joint discussion and decision-making: But just briefly I think. I think I told her what I was doing, what my intentions were. In another couple, the woman did want to talk about pensions to her partner but realised this was a touchy subject: I do [have a pension] but [he] doesn’t ... It’s something I’m anxious about but he’s not anxious about ... Yeah, I do say it but I don’t push it because he’ll just get cross. The man in another couple told us that: She keeps telling me that I’ve got to get one.

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And in another couple, the man initially says that they do not talk about pensions but then suggests that they do, and that it was his intervention that prompted her to start paying into a pension: We don’t discuss it at all, no. I talk to her about it you know, about starting saving you know, about time she started thinking about saving because I can’t go on forever working. I think it was me that persuaded her to go onto the pension at work. In fact, many people gave pensions very little thought. One couple in their 40s were living in council accommodation with five of their six children and his mother. No one in the household was currently working. When we asked about pensions, she said: To be honest I’ve never thought about it myself … I mean, don’t get me wrong, I would look at it but I think, well a pension’s, I know it’s for when you get older and things like that but you know, I’m looking at now sort of thing not in the future. And he said: Personally I feel that we’ll cross that bridge when we come to it. I’m not in a situation at the moment to do anything about it so it’s not something that I’m going to worry about, we’ve got some other things to worry about. One woman said that she could not afford to save in a pension and her partner confirmed that: Well we’ve never discussed it. Saving towards a pension? We’ve never discussed it really. Another couple were in jobs but replied in a similar vein: We don’t really talk about pensions as such because as I say it’s pointless because there’s no money in there to take. There’s no spare cash at the moment so we couldn’t even think of putting in for a pension. Another couple gave a similar answer: I think we’ve maybe mentioned it once that it would be nice to do something, but not seriously.

Savings Some couples were very open with each other and engaged in detailed discussion and decisionmaking around savings:

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Oh we do quite often [talk about savings], we know what each other has got in the accounts. We don’t not talk about it, it’s not that money is [his] and this is mine. We know exactly how much money we’ve got in our accounts. We know the passwords to get in and everything, we transfer money out for the Visas and things. We know exactly what balances we’ve got. [He] has said to me once or twice we ought to try and save a little bit each month. Even if it’s only like £50 and I try to do that. One of the triggers for more discussion and joint decision-making was saving for a particular event such as a wedding: I think part of it came from when we were getting married because people gave us money for stuff and to put towards the wedding and things like that and it was like oh okay, we’ll just stick it in a savings account somewhere and it came about from that I guess. Others did talk about saving and may have had some capacity to save but found it difficult to put their discussions into more concrete practice, possibly due to disagreements about whether or not saving was a priority: Well, it’s something we talk about but it’s something we never get round to actually arranging, or…I don’t know. It would be nice to have savings. Well she always tells me she likes to save a bit more than what we are doing. And I’ll just say look, as we are we can’t afford to put anymore away. I mean give it another six months or a year and then hopefully things will pick up and we’ll be able to put more money away but at the moment we just try and put as I say £200 a month, one month we might put away £100 the following month. It just depends what we’ve got. In some couples, one person took the lead on this issue: Yeah [she] probably encouraged me [to start an ISA], pushed me into it again. Yeah, she pushes me into more savings but then I’m…I wouldn’t say, I’m a bit idle really, just can’t be bothered with the research and whatever and phoning up the bank or going into the branch or whatever, once it’s done I’m grateful really. It’s just a good push to be honest. If you asked me anything to do with sport or football or something that interests me … I’m probably yeah, but something … I can’t be arsed about it really. Well we do talk about it because I mean I sort of nagged her into setting up herself a direct debit with her ISA because she wasn’t saving anything.

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No, I just do it and [he] just goes along with it. He seems quite happy. I’ll always talk to him beforehand and say, what do you think about this? But he does just let me get on with we save this much, we spend this much. But [he] would do all the groundwork and say look, what do you think about this? And what do you think about that? We do talk about it but I’ll say, are we going to be all right? Because I know he really has got the ultimate in his head how we are. I do rely on him for that. In some cases, where there are disagreements over saving, people tended to become more individual in their savings patterns: Not really. I don’t think we talk ... we mention it now and again because [she] wants to go on holiday and I said I need to buy a car and I put that money away now for a car. Others also followed a more independent approach to saving: We’ve opened the joint account, which is purely for bills. We keep our [other] financial affairs separate. We save separately really … No not really, we don’t [discuss savings], no. As with pensions, a number of couples said that there was no point thinking of discussing savings because they simply did not have any spare money that they might be able to save: No, not at the moment because the job that [he] does and I do … if we don’t work we don’t get paid so it’s not something that we’ve talked about. Not a lot really because we just haven’t got the money to save up. I don’t think we really talk about it because I think we know that if we had anymore to put away we’d just naturally do so. But it’s just a case of not really having a great deal.

Borrowing and debt Some couples had had experience of debt with a previous partner and these couples felt it important to discuss issues around borrowing and debt with their new partners: I explained to him when we just met what I’d gone through but he’d been through similar circumstances with his ex-wife anyway so we both understood and we both agreed that that we would never ever go into any debt like that for anything no matter what and we haven’t.

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We have a policy between the two of us after what happened between our previous marriages – if you can’t afford it you don’t buy it. Basically. We don’t want credit cards. We don’t want personal loans. We don’t want nothing like that at all. Another couple with debts from previous relationship told us: Yeah, he knows the whole extent of how much debt I’ve got. You can’t go into a relationship … I didn’t really want to say … [but] I feel better for it, because it’s open now and we work with what we’ve got, so... We’re pretty big on that the fact to be open about everything. But once again, in some couples, discussion and decision-making was led by one of the partners: He’s more up on it than I am because he controls it but to be honest he controls that side more than I do, because he’s the level-headed one out of the two of us. I was looking at taking a loan out and I did get involved, and again it’s just researching really, shopping around isn’t it? I get [him] to do that. Which is the best one? And then he’ll tell me. It’s been both of us, yeah; it’s been both of us in the past when we’ve been looking at this; how we are going to finance the car so. I wanted to save up and get a cheaper car but he thought well why not borrow a little bit of money a get a decent car that’s not going to let us down and so there was a discussion really between the two of us. Some couples made independent decisions around credit card debt and personal loans: I tell her afterwards really. She knows something’s not right or something’s going on, but I ... [don’t discuss it with her] in detail no, no. I just tend to tell her what I’ve done. Some people did not discuss credit or debt because they did not use credit (much) and did not have any problem debts. Probably don’t, because; it’s like I say, we tend to; we tend to pay cash for everything or on interest free … we don’t really need to talk about credit. Not much. Not much ... No need to, no. Whereas some couples had very open discussions about debts from previous relationships, some made a conscious effort not to talk too much about the debts that had accrued in previous relationships and were still being paid off:

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We’ve got a plan to move forward and so it doesn’t involve borrowing more money, it is just a plan to pay this one and that one. Whichever is the highest interest rate we pay off and then move forward from that. And we’ve got a plan that maybe in four or five years that we should be able to clear these debts . We try not to make it the topic of conversation all the time. Sometimes people would talk about difficulties repaying debts but the discussion did not necessarily lead to a decision. When asked how often they talked about issues around credit and debt one man told us: Most of the time, not most of the time but it’s something that we do discuss and we’ll say let’s try and do this or lets try and … but there’s no actual plan set up yet to sort it out. When asked why this was he replied: Probably because I’m not here at night half the time, I’m always working. I work three nights a week.

Explaining variations in decision-making Although this is a small qualitative sample, there did seem to be a possible link between the socio-economic status of the couple and approaches to decision-making. For example, middle class couples in the sample seemed more likely to employ the ‘joint led model’, particularly with the male partner taking the lead. Unemployed couples and couples in precarious jobs were more likely not to make decisions at all about assets and debts (usually because they had few choices in this area). An even stronger relationship seemed to exist in the sample between ‘relative resources’ within the couple and decision-making approaches. For example, where the woman had a job in a higher socio-economic position, it seemed much more common for her to take the lead in decision-making or for the couple to employ independent decision-making. Where the man had a job in a higher socio-economic position, male-led decision-making seemed much more common. One partial reason for this seemed to be that women in clerical jobs with manual working partners sometimes worked in the finance sector (or a related sector) and this gave them access to more formal and informal information than their partner: Because of where I worked, because working for a solicitor ... that helped us out. [He] probably won’t have much of a clue on where his money is because I tend to deal with most of it. But yeah, it does help being in insurance. Other women did not work in the finance sector but their apparently greater ability to use the Internet and their greater clerical/numerical skills were linked to them taking a lead in asset management. Linked to this, some people seemed to be more interested in finances (perhaps seeing investments in stocks and shares as a bit of a hobby) and so these people took the lead.

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In some couples, the leader in decision-making was said to have more time to browse the Internet and search for good deals, for example on mortgages or savings accounts. However, one partner’s greater knowledge, interest or skill in using the Internet does not seem to explain entirely the link between relative resources and decision-making. Perhaps the person bringing the most money into the couple (in terms of either income, assets or both) feels more of a right or responsibility to making decisions in this field. Or perhaps they have more (economic) power to make decisions. Marital status was also linked to decision-making approaches. Cohabiting couples in our sample (whether first-time cohabitants or those who had been in previous relationships) seemed much more likely to make independent decisions about assets and debts, if they made any decisions at all. Married couples seemed much more likely to engage in some kind of joint decision-making and this was particularly the case with people who were in second marriages. As we have seen, people in subsequent relationships sometimes had debts from previous relationships and sometimes they had different levels of assets. They therefore had more to discuss, perhaps, than other couples. And those that had decided to re-marry seemed to think it important to make more joint decisions, in some cases equal and joint decisions, than in their previous relationship. Marital status is linked, to some extent, to length of relationship so the link we see here with decision-making could be partly related to this also. And there were examples in which people said that they had changed their approaches to decision-making or were planning to do so in the future. For example, some cohabiting couples who had been together for a short time were planning to bring their finances together and consider things more jointly in the future. But some cohabiting couples were longstanding and did not seem to be planning to change their more independent approach. The presence or absence of children did not seem to be linked to different decision-making approaches in our small sample, once we considered other factors.

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Chapter 4 Policy issues SUMMARY We asked our interviewees for their views of what could be done to help couples generally in relation to assets and debts. Some mentioned the need for better financial education in schools. Some suggested free and independent financial advice – not just linked to debt and money management but, more positively, in relation to pensions, savings and mortgages. There was a strong, general view that financial products were too complex and so it was difficult to make good choices about which mortgage or which pension to choose. People wanted financial products that were simple and secure, provided by organisations they could trust. They did not particularly trust the financial services industry, which was seen as too keen for people to borrow and too reluctant to give advice in their customers’ best interests. People in the sample held established views on how cohabitation and marriage should be treated in relation to assets and debts was. They generally thought that, after a certain point, and certainly where the couple had children, cohabiting couples should be treated the same as married couples. Indeed, many already thought this was the case in law and in practice. There was a minority view, however, that marriage should be treated differently and that cohabiting couples could always draw up their own legal arrangements if they wished to. There was also a view that couples should be (obliged to be) open and honest with each other about assets and debts, something that members of our sample had not always experienced with previous partners. However, this raises issues of individual privacy.

People in the sample held established views on how cohabitation and marriage should be treated in relation to assets and debts was. They generally thought that, after a certain point, and certainly where the couple had children, cohabiting couples should be treated the same as married couples. Indeed, many already thought this was the case in law and in practice. There was a minority view, however, that marriage should be treated differently and that cohabiting couples could always draw up their own legal arrangements if they wished to. There was also a view that couples should be (obliged to be) open and honest with each other about assets and debts, something that members of our sample had not always experienced with previous partners. However, this raises issues of individual privacy.

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P olic y issues

Overview So far, this report has concentrated on the complexities and subtleties of ownership and decision-making within couples in relation to assets and debts. This chapter turns now to policy implications stemming from the research. At the end of each interview, we asked respondents what could be done to help couples manage money better. Many of the suggestions related to broad policies and practices rather than those particularly concerning the ownership and management of assets within households but they are reported on here as they make an important contribution to policy debate. The final section of this chapter then turns more specifically to some policy issues related to intra-household ownership and decisionmaking. Before turning to the suggestions made by our sample it is worth remembering that this was a sample of working-age couples across the socio-economic spectrum. The interviews took place between April and June 2009, at a time of recession, when house prices had been falling, interest rates were low, and redundancies and unemployment had been increasing. Some people in the sample felt that certain groups were at a particular disadvantage in relation to support from government and other agencies. For example, people ‘in the middle’ felt that they were missing out, as did people without children and the self-employed: No, I don’t think that people, like middle, your average couple don’t seem to get any help. In times of crisis. And they’re the ones that are suffering the most in that they’ve lost pay, their mortgage rates, chances are, are fixed, or going up and they’re the people that don’t get the help, that don’t get the money. There’s no money pumped into that part of the community is there? I’m talking about people in relationships, like young married couples without any children that are middle-income earners, I don’t think there’s anything for us anyway so it’s pointless giving us any information because I don’t think there’s anything the government can give us anyway. I think myself personally, we don’t have children, and I feel sometimes it’s people like myself and [my partner] that are actually penalised. Because I just feel as though we have to pay for everybody else because we’re like the middle ground. I think I had the experience when I was left with the children because I was selfemployed there was no help for me at all and this time there’s no help for me because I’m self-employed. Another general theme to emerge from the interviews was that people should be given more financial education at an earlier age: I think they should be advised from a younger age. Maybe even from school, how to maintain and look after your money.

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I think it all comes out in educating your kids … Yeah, I think people are old enough and ugly enough to go and find out, if they’ve got problems that they can find somebody who can help. I think it actually stems right back to when we were growing up. There was a general view that financial products and policies (for example, around pensions) were too complex. Rather than providing people with more information to explain these, people wanted the products, systems and policies to be simplified: I think the government tends to confuse things. There are that many messages that come out and I pick it up when I go out and see people, people will say to me, what’s the change in ISA allowances? What’s the change in pension legislation? What’s the change in ... and it changes all the time and I don’t think people actually know what they can have and what they can’t have. And when it gets confusing, the simple answer for a lot of people is simply to do nothing. Personally, I think information, leaflets and all that coming through the post is an absolute waste of time. People did want advice but they did not trust advice that came from any people or organisations that were also involved in selling financial products: And at the end of the day independent financial advisors are out to make a profit one way or another. So I think there is an issue with that. I certainly think and probably most people do there’s a huge issue with trust in the banks at the moment, for any sort of advice. I think people like the banks, they should advise people more instead of just lending the money as easily as what they have done. And credit people. One concrete suggestion was for a type of Citizen’s Advice Bureau to be set up to help people find out more about personal finance. This was not seen as being aimed at people with particular problems but at anyone: Perhaps they could, almost like a Citizen’s Advice, which isn’t Citizen’s Advice but it’s there as well. Like a drop-in centre with all sorts of perhaps financial help. I don’t know how they could do it to an extent but just a friendly face who you know is unbiased, a bit like when you go to your doctor or your dentist. That you could make an appointment for and it’s not going to cost you money. At present, there is a variety of agencies providing free debt advice (such as National Debtline) and the government is piloting a Money Guidance Scheme in the North of England to help people avoid getting into debt (Department for Business, Innovation and Skills 2009) but there is no general publicly provided advice service to help people choose mortgages and savings products and make decisions about pensions. Information is available on various government websites such as the Financial Services Authority (FSA) and Department for

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Work and Pensions, as well as more commercial websites such as moneysupermarket.com. But consumers who want more individual advice will have to approach financial service providers and/or independent financial advisors. Issues then arise in relation to cost and trust (see the Financial Services Authority’s latest paper on the retail distribution review – Financial Services Authority 2009).

Housing assets There were relatively few policy suggestions made around housing assets but, as mentioned above, complexity was seen to be an issue with mortgages: I think that there’s a lot of financial mortgages and savings and I think it’s all too complicated. I think if they can do anything, it’s to make it less complicated. Because I work in [financial services] and I’ve never worked with mortgages as such, but there’s too many complications around things and I think it makes people difficult to understand them, which makes them make the wrong decisions. Another interviewee thought that government should take a more direct role in the running of the banks it had supported, financially: I suppose where the Government has a stake in banks, or it’s propping up banks, they could tell those banks they’ve got to pass on interest rate cuts. They could do that.

Pensions Many more suggestions were made about pension wealth than housing wealth. In line with previous research, people felt that they knew too little and did not know where to turn to get information they could understand and then act on: My knowledge of pensions is shocking and at the moment we are kind of going along swimmingly and all the rest of it, but when it gets to retirement age you know, we could be in a real jam. I think that we could, you know, have more help with things like that and I don’t know whether that could be in partnership with the employees as well that, you know, the Government almost enforce a, you know, a pension that you’ve got to contribute. I don’t feel there is enough advice for people on pensions really. I think from an early age, from the age of employment, 18, I think you should be taught about pensions straightaway. And maybe you should start thinking about having a private pension, as soon as you start earning a weekly wage the government should probably, I know they do now, but try and get you to take out another pension to help you at the end of it so as well as the state pension everybody would have their own private pension. And depending on what you put into it is what you get out of it.

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I think it would be good if employers and the Government could do more to spell it out a bit more about pensions. Because you get these, like on my pension I get this newsletter every month. I might have a quick cast my eyes over it. But there’s nothing there that really spells it out. There’s nothing there that says, ‘You should be worried that there’s a shortfall in your pension,’ or ‘Your pension’s doing really well at the moment,’ and it explains why that is. It’s just a report, just numbers, which doesn’t really mean ... maybe all the information is there and I just need to spend more time sitting down and going through it but I just tend to cast my eyes over it really and don’t really give it a lot of thought. Pensions suddenly are a minefield. The government stepped in saying that they wanted more people to have pensions and then made it a minefield. There were so many changes and even the financial advisors were finding it difficult to explain the difference between so many different types of pensions. So they never seem to simplify anything. Like ISAs came out and it was a tax-free account and that was simple. But then they ... you can have a cash ISA, you can have a stocks and shares ISA or you can have one that does stocks and shares and ... but you can’t ... they never seem to come out with something in a very simple manner. I don’t understand the opt in, the opt out, the SERPS. I’ve heard about it, I don’t understand it. So I think just standardise it and make it very clear. I know there’s been stuff around mis-selling of pension schemes and I’ve heard about it all but because it’s not really on my radar it’s not about what I’m interested in. There were also concerns about how secure and valuable occupational pensions were: They (employers) haven’t got a very good track record have they? Some of the pensions, who was it? Maxwell and that lot and I know people that have got Rover Land Rover pensions that are dropping and dropping and dropping). People wanted pensions that offered simplicity and security. Someone suggested a pension on the lines of an ISA, which she considered to be relatively simple and secure: And I think if that was more guaranteed a lot more people would go into a pension Some people raised the issue (which particularly confronts people ‘in the middle’) that if they have a small private pension they may then not be entitled to means-tested support and so be little better off than people who have made no private pension contributions in their working life: My ex-wife used to work as a care home manager … [and] you could see there some of them were paying privately, some of them were state. They all got exactly the same treatment. So her philosophy on it was why pay into it when you get exactly the same?

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Savings The issue of means-testing also came up in relation to savings: Why should they penalise somebody who’s probably got a few thousand and they’ll say well we can’t give you benefit or something like that because you’ve got £5,000 in the bank and yet Joe Bloggs down the road has got nothing at all, is it fair? So I’ve managed to save a little bit of money but I’m not going to be able to get the benefit until I’ve spent my savings. One person mentioned the trade-off between having high interest rates for savers against low interest rates for homeowners: I can’t see at the moment that there are too many places where you’d want to put your money so offering couples advice on how best to save, unless the government can start getting the interest rates [up] which of course would then adversely affect everyone in different ways, I can’t see that there’s any way of going about forcing a big saving drive. One radical suggestion here was, as with National Insurance contributions for pensions, to make some degree of saving compulsory: Yeah, I think it should have been made compulsory possibly. Then I’d probably, I was saying I couldn’t afford it, I suppose if they made it compulsory…it’s law.

Borrowing and debt There was widespread concern that the financial services providers had given out credit too easily and that something should be done about this: I think they could start by not pushing debt onto you. I think with credit cards they’re given out too easily. And I think that needs to be monitored a bit more closely because I’m lucky in the sense that I’ve always been the type of person that doesn’t get into debt and I am careful with my money but there are a lot of people that are just no good with money. Yeah, I mean I went to the bank for a finance review and they were trying to give me a credit card, they’re just not there to kind of give support, they’re there to try and sell you something else. They’re only interested in themselves. If you go to a building society, what can they sell to you? They’re not bothered about your financial ... it’s happened to me. I went to close an account. They wouldn’t just let me close the account. They wanted to sell me something else instead.

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Assets and cohabitation/marriage As well as looking at policy suggestions relating to particular assets and debts, we were also keen to explore people’s views about how cohabitation and marriage should be treated in relation to money. We presented our respondents with vignettes of two couples who were separating. One hypothetical couple, John and Sarah, had been living together for 15 years and had two children together, whom she looked after full-time. He worked for the local council and had a local authority pension and £3,000 saved. She had no private pension or savings. They had been paying into a joint mortgage for 10 years. We asked respondents what they thought would, and should, happen with these assets if the couple separated. In line with previous research in this field (Barlow et al. 2005), most people in our sample believed in the ‘myth’ of common-law marriage and thought that John and Sarah would have the same rights as a married couple because of the length of time they had been together and because they had children together. They thought that this meant that the assets would be shared between them, though people were not always very sure about this. This view about what would happen was also generally what most people thought should happen. Well it’s classed as common-law wife or common-law husband now isn’t it? ... So it would be shared, I’d presume so. I’d have thought it would have to be split if they’ve lived together for 15 years. I think they would have to halve everything because I’m pretty sure that even though they’re not married, for that period of time that they’ve been together, I’m pretty sure I’ve heard at some point it says that after you’ve been living together for a certain period of time then you’re almost like common law man and wife and I think, I’m pretty sure you would have to ... you’ve got children as well, I think you would probably have to split everything 50, 50. I think. Not everyone, however, agreed that the assets should be shared equally. One woman (in her first cohabiting relationship) said: I think if it’s his pension and he’s saved, I don’t think it’s fair that she has it. That’s what I believe. One man, with personal experience of divorce said: Well I think you become a common-law husband or wife after so many years don’t you? So probably the wife would try and take him for whatever she could get out of him by the looks of it. Another man commented: I would say usually the man usually loses out and the woman usually gets the house and the kids and the dogs and whatever.

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Some people were aware that the law might be changing on this. One woman who had previously been divorced and was now living with someone said that John would not currently have to share his assets with Sarah: but I know there was going to be a new law coming out whereby couples who cohabited for so long would be entitled to something if anything ever came about. But I wouldn’t swear to it. People generally thought that this couple’s circumstances should be the same regardless of whether or not they were married. The main reason for this view appeared to be the fact that they had children together. Length of relationship was also an issue but the presence of children appeared to be most important in people’s minds: I don’t think it really matters that they’re not married. They’ve got two children. The second vignette was a couple, Kevin and Margaret, who were in their fifties and had lived together for five years. Both had previously been married and divorced. They lived in Margaret’s house, which she owned outright (worth about £150,000). Ken had a company pension but also £3,000 outstanding on credit cards. Neither of them had any savings. People tended to think here that the assets/debts should not be shared if the couple were to separate. This was for a number of reasons, primarily the difference in the amounts of assets and debts brought into the relationship along with the length of the relationship. The absence of children was also a factor: You’ve got to really cover yourself and like you know, if you’ve worked hard and saved hard, then I don’t think really you should dish it out to someone else easily. Well that’s Margaret’s house, they’re not married, she owns it outright. Well Ken has just got to move out. That’s what I think personally. I don’t know the circumstances again. There’s no children involved. Ken should just move out and get on with his life. There’s no dependents, which I think makes a massive difference. Well, if she’s not giving anything out of this property to him, then he wouldn’t be entitled to give her anything from his pension. That’s his [debt] problem. He has to sort that out himself. Some people had little sympathy for Ken: Margaret should keep the house and chuck him out. And Ken should sort his own pension out and pay the outstanding credit. That’s it. Others were a bit more generous towards Ken due to the length of the relationship and his possible contribution to the home:

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After five years living together? You’d like to think you wouldn’t just walk away with nothing. I would think he would possibly get some part of that £150,000… I suppose it depends on what he’s paid into it with her on the running costs and so forth over the five years. Others felt that, in the absence of a marriage contract, cohabiting couples who wanted to share their assets in some way should make a legal contract to do so: Well I would say that’s hers outright unless she’s signed some sort of agreement that he’s entitled to half. People had mixed views about whether marriage should make a difference to Ken and Margaret’s position. Most held on to their previous view (in relation to John and Sarah) that marriage should make no difference Not to me personally, because I just think marriage is a certificate and I mean if you’re committed to somebody it doesn’t matter if you’re married or you’re not really if you’re committed to a person. But others declared that marriage should make some difference if people had consciously chosen to enter into a legal partnership: Yeah, I think it does, I think that’s the commitment you make when you get married. I think you know what can happen really. I think that’s the commitment. And obviously if he’s got debts and everything then obviously you know what you’re taking on with Ken or whatever, so… Yeah, I think if they were married then that’s a commitment that they made basically and he ought to be entitled to a share of it. The Law Commission (2007) has recommended that certain cohabiting couples might be treated in the same way as married couples in law in relation to assets and debts but the government has so far not acted on this recommendation. Our findings suggest that people generally do think that, after a certain point, and in particular if the couple have children, cohabiting couples should be treated in the same way as married couples. Indeed, people think that this is already the case in law and practice. However, there is a minority view, among our participants, that marriage should be treated differently and that cohabiting couples should draw up their own legal arrangements if they wish to share their assets and debts. Linked to this was the suggestion that people should make a ‘full disclosure’ of their financial situation when entering a new relationship. One person likened this to a Home Information Pack, in effect suggesting that there might be a Relationship Information Pack that included information about finances. Others also suggested that banks and other financial services providers should be obliged in law to inform a partner if one member of a couple takes out a loan or other financial product. This was suggested, in particular, by people whose previous

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partners had accumulated debts without their knowledge. This brings individual privacy into tension with any right to transparency in a relationship. Full disclosure/transparency is demanded on divorce, so should full transparency be demanded on marriage, or when (married) people take out a loan or acquire an asset or accrue debts? The practical difficulties of doing this may make it impossible and there may also be resistance to government legislation in such a private arena but there was certainly some support for this kind of arrangement among our sample, and it highlights concerns about how couples share and manage assets and debts.

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Chapter 5 Conclusions SUMMARY Assets and debts are not necessarily shared equally within couples in terms of either formal, legal ownership or perceptions of ownership. However, some areas of social policy (such as couple-based means tests of assets) assume that assets are shared equally. This is an erroneous assumption. Ownership becomes an issue when couples separate, as the laws around the division of assets and debts on divorce do not currently apply to cohabiting couples. The partner in a couple who has most of the assets during the relationship is likely to walk away with most. And the partner with the most debts in their name is likely to keep these, even if the debts were accrued to cover joint bills or goods. This is contrary to what many people assume, including many people in cohabiting couples. This highlights a need for greater public awareness of the current law in this field and/or changes in the law. While couples are together, unequal distribution of assets and debts can cause anxiety or hardship for one member of a couple, as can exclusion from financial decisionmaking. And even where people feel relaxed in relationships with such inequality, the experience of some people suggests that they may regret this later, if the relationship ends. This may suggest a need for discussion of these issues within financial education and capability advice.

Previous research on the distribution and management of income within couples has clearly highlighted that couples do not always share income equally and that this can lead to hidden poverty and financial exclusion within a couple, often to the disadvantage of women in couples due to their lower levels of earnings/income. This research similarly shows that assets and debts are not necessarily shared equally within couples in terms of either formal, legal ownership or perceptions of ownership. For example, there may be two couples in which one member has money in an ISA, so formal ownership is clearly unequal. But the partners in one of these couples may consider the assets to be joint and the partners in the other couple may consider them to be individual. We cannot know, from formal legal ownership, how the assets are perceived by the couple; indeed, we cannot assume that both members of the couple perceive ownership in the same way. Some areas of social policy, however, assume that assets are shared equally. For example, within social security policy, couple-based means tests of assets are carried out, on the assumption

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that these are a joint resource. Our research suggests that this is an erroneous assumption, particularly in relation to couples with different levels of resources between them and to cohabiting couples. In couples in which one member has a better-paid, higher-status job, that partner is likely to have more assets and take more of a lead in decision-making around assets. Cohabiting couples also seem more likely to keep any assets and debts individual and make independent decisions about them, especially if they are in a second or subsequent cohabiting relationship. Length of relationship also seemed relevant here, as couples tended to change their financial arrangements over time but there does seem to be something independently important about marriage. But does it matter if assets and debts are not shared equally within a couple? While the couple is together, it may seem that there are relatively few problems with this. For example, if one member of a couple has a much better pension pot than the other, neither member can benefit from this until retirement, at which time the issue becomes one of how the income from this pot is shared. As far as housing wealth goes, while the couple is together and living under the same roof, does it matter who owns more of the equity in the home? Problems arise, however, when couples separate. Divorce law contains various rules and guidance about the separation of assets and debts on divorce and these begin with an assumption of equal division unless there are reasons to do otherwise such as: the marriage has been short; and/or the different parties have brought different amounts to the marriage; and/or made different contributions. We have seen that women do seem to be trading housing wealth for pension wealth but is this necessarily in their best interests? These rules around the division of assets and debts on divorce do not currently apply to cohabiting couples and so the partner in a couple who has most of the assets during the relationship is likely to walk away with most when the relationship ends. Similarly, the partner with the most debts in their name is likely to keep these even if the debts were accrued to cover joint bills or goods. This is contrary to what many people assume, including many people in cohabiting couples. There is, therefore, a need for greater public awareness of the current law in this field and/or changes in the law. The question remains, however, with couples who stay together – does it matter whether one member owns more and has more control over the assets and debts? As far as pension provision and housing wealth are concerned, it could be a problem if one partner in the couple feels anxious about their situation relative to their partner. For example, if one partner in a cohabiting couple has all the housing and pension wealth in their name, the other partner may feel anxious if there are problems in the relationship and this may mean that some people remain in unhappy relationships due to their ‘asset dependency’. As far as savings and debts are concerned, there is a potential source of financial exclusion within couples. For example, where one person has high levels of debt and is servicing these from their own income this person will be at risk of financial exclusion even if their partner has no debts and perhaps also individual savings to draw on. Most of the couples in our sample said that, even if they kept their money separate, they would ‘help each other out’ from time to time. However, some couples, with the most independent forms of money management and decision-making, knew little about their partner’s financial situation and so financial exclusion within couples is a distinct possibility.

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There is also a potential issue if one member of the couple feels excluded from decisionmaking. This was not raised as a problem in our sample though, as we have indicated, people with particular problems in this regard may be reluctant to take part in research and those who do take part in the interviews may be reluctant to talk negatively about their partner even when assured that the information will be treated in confidence. There were certainly some examples, however, of people’s previous relationships in which they had felt that they had not known what their ex-partner was doing (for example, in running up debts) and therefore concern that in a new relationship, decision-making would be more open and equal. Perhaps there is a role in initiatives on financial literacy and capability to consider the couple dimension rather than seeing this as solely a question of individual education and capability. Broader issues of empowerment within relationships, self-confidence and emotional literacy are also pertinent here. There were also a couple of examples of people who were not the main decision-makers in the couple who felt anxious about their financial situation. Lack of control over the finances might have been a contributory factor here. However, there were also examples of people who were the main decision-makers who felt more anxious than their partners and so control over finances can be a burden and does not necessarily lead to greater financial well-being. Overall, levels of anxiety over money seemed to be related more to the actual financial situation of the couple (particularly the level of debt) than to the decision-making approach or the intrahousehold distribution of resources. The main conclusion from this study is that assets and debts are not necessarily shared equally in couples. Nor do couples necessarily play an equal role in decision-making around assets and debts. These points need to be considered further when collecting and analysing data on assets and debts and in particular when forming laws and policies in this field. These points also need to be raised with the general public to encourage greater openness and understanding of financial issues to increase financial inclusion and well-being.

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References

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Disney, R., Bridges, S. and Gathergood, J. (2008) Drivers of Over-indebtedness, London: Department for Business, Enterprise and Regulatory Reform. Financial Services Authority (2009) Distribution of Retail Investments: Delivering the RDR, London: FSA. Ginn, J. (2003) Gender, Pensions and the Lifecourse, Bristol: The Policy Press. Goode, J., Callender, C. and Lister, R. (1998) Pure or Wallet? Gender inequalities and income distribution within families on benefits, London: Policy Studies Institute. Goode, J. (2009) ‘For love or money? Couples’ negotiations of credit and debt in low-income families in the UK’, Benefits, 17 (3), 213–24. Hand, K. (2006) ‘Mothers’ accounts of work and family decision-making in couple families’, Family Matters, 75, 70–75, Australian Institute of Family Studies. Kempson, E. (2002) Over-indebtedness in Britain, London: DTI. Kempson, E. and Finney, A. (2009) Saving in Lower-income Households: A review of the evidence, London: Her Majesty’s Treasury. Kirchler, R., Rolder, C., Holzl, E. and Meier, K. (2001) Conflict and Decision-making in Close Relationships, Hove: Psychology Press Ltd. Law Commission (2007) Cohabitation: The financial consequences of relationship breakdown, London: Law Commission No 307. Law Commission (2009) Intestacy and Family Provision on Death, Consultation paper 191, London: Law Commission. Lee, C. and Collins, B. (2000) ‘Family decision-making and coalition patterns’, European Journal of Marketing, 34 (9–10): 1181–98. Lewis, J. (2001) The End of Marriage? Individualism and intimate relationships, Cheltenham: Edward Elgar. Ministry of Justice (2009) Judicial and Court Statistics, Cm 7467, London: The Stationery Office. National Statistics (2005) Housing Tenure. Online at http://www.statistics.gov.uk/cci/nugget. asp?id=1105. Pahl, J. (1989) Money and Marriage, London: Macmillan.

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Appendix I Fieldwork methods We used a professional recruitment agency to find people in the appropriate categories and seek informed consent for the interviews, arranged at a time convenient to the respondents. This proved a cost-effective, efficient and methodologically rigorous means of finding people for research interviews. We paid each respondent ÂŁ30 for their time. This was both a thankyou payment and also an incentive to take part as we were talking to people for about an hour about money issues, which are fairly personal. For the vast majority of interviews we did not ‘gender-match’ interviewer to interviewee. The men in the sample were generally interviewed by female interviewers (either Karen Rowlingson or Jayne Thornhill) and the women in the sample interviewed by a male interviewer (Ricky Joseph). We tried some gender-matching but felt the interviews flowed more smoothly without this. All interviews were tape-recorded, with the consent of the interviewees. The interviews were then fully transcribed by a professional transcriber, fully compliant with data protection practice. The anonymised data was loaded onto a computer-assisted qualitative analysis package, NVIVO 8. The data was then analysed through an iterative process to develop themes and compare different cases. The interviews provided very rich data and the process of analysis was very time-consuming. This report can only give the key findings from the research and we intend to provide further detail from the interviews in other publications. Talking to people about assets and debts can be very sensitive and money issues can be a source of conflict within couples (Rowlingson and McKay 2002). We have many years of experience with such interviewing and were therefore aware of the need to handle the interview situation with sensitivity. For example, we used vignettes to help in drawing out attitudes without asking directly for personal information. Also, we provided a list of contact numbers for CAB, debt advice and other agencies available in case interviewees requested further support from the interviewer. Maintaining confidentiality was crucial in this study as one member of a couple may have told the interviewer something that their partner did not know, though this was relatively rare in practice. We sought to maintain individual confidentiality by ensuring that the report does not make it possible for one member of a couple to work out what their partner has said if there is any sensitivity involved. The findings from the data therefore avoid mentioning very specific points and some details have been changed to avoid identification.

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Interviewees were given full information about the study and told that they did not have to answer any particular questions if they did not wish to do so. We adhered to the ethical guidelines of the Social Research Association and Market Research Society. The research was sent for ethical review to the University of Birmingham’s Ethical Review Committee, which conforms to the ESRC’s guidelines. A number of comments were made, including a request for reassurance on how we would prevent one member of a couple being able to identify what their partner had said in the report on the findings. This is something we have taken great care over. The committee also asked for some changes to the participant information letter, such as the inclusion of a statement about how long the data will be kept. The committee also asked for an amendment to be made to the consent letter so that it would include a signature from the interviewer as well as the interviewee. These changes were made.

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Appendix II Topic guide University of Birmingham Money Management within Couples Topic Guide

INTERVIEWER DETAILS Date Name of interviewer Interview start time Interview end time INTRODUCTION (to be done on an individual basis). Thank you very much for agreeing to be interviewed My name is xxxxx and I am working for the School of Social Policy at the University of Birmingham. This study is about how couples manage and make decisions about money. These issues are particularly important given the current economic climate and the study will make recommendations to government and the banks, building societies, etc. about how they might respond to any financial problems that couples face. The interview will include questions about your background, housing situation, savings and pensions, borrowings, paying bills, and any changes in household or family situation circumstances which have affected these issues. GO THROUGH PARTICIPANT INFORMATION LETTER Have you any questions? COMPLETE CONSENT FORM/RECEIPT

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CHECK INTERVIEWEE BACKGROUND FROM RECRUITMENT AND FILL IN Serial number Age Sex Marital status/living arrangements Number of children living with you (of any age) Age of children Occupation of self Occupation of partner Ethnicity

ASK ABOUT TAPE AND SWITCH ON, WITH PERMISSION

Section 1: Background 1. Please tell me a bit about yourself 1.1 Education – age left school, qualifications. 1.2 Main jobs since left school. 1.3 Brief family change. 1.4 Who lives here now (ask occupation of older children). 1.5 Brief housing changes – when moved to current home? 1.6 Age left home. Section 2: Housing situation 2. Do you own your home/have a mortgage? 2.1 If yes: 2.11 Type of mortgage? (e.g. endowment, repayment, current account, fixed rate, tracker). 2.12 How did it come about that you took out this mortgage? 2.13 Link to family/life cycle change? 2.14 When? Why? Why this product/provider? Shop around? 2.15 Take advice? From whom? 2.2 2.3 2.4 2.5

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Who made decision and who carried the decision out? Jointly/singly? 2.21 Agree/disagree over it? Is the mortgage in joint names or one name only? Is the home in joint names/jointly owned? (equally?) If have a mortgage ask: 2.51 How do you and your partner feel about your mortgage? 2.52 Any problems?


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2.53 How much do you talk about these issues together (if at all)? 2.54 How openly? 2.6 If no mortgage: 2.61 Ask about any previous experience of home owning. 2.62 Ask attitudes to buying a home (with a partner). 2.7 Ask all: 2.71 What are your views about buying a home? FOR EXAMPLE: What do you think are the advantages/disadvantages of having a big mortgage? 2.72 What would your partner think? 2.73 How much do you feel you/your partner know about different types of mortgage deals? Section 3:Savings 3 Do you/your partner/children currently have any savings/money put by in any of these places eg for a rainy day? SHOW CARD A eg cash at home, bank, building society accounts, premium bonds, ISAs, child trust fund, stocks/shares, others. 3.1 If yes – ask for each savings: 3.11 How did this come about? When taken out? Why? What for? 3.12 Links to family/lifecycle change? 3.13 Why this product/provider? Shop around? 3.14 Take advice? From whom? 3.2 Who made decision and who carried it out? Jointly/singly? 3.21 Agree/disagree? 3.3 Do you jointly own any savings (with anyone)? 3.31 How much joint, how much owned separately? 3.4 Ask all: 3.41 How much do you feel you/your partner know about different ways of saving? 3.42 How do you and your partner feel about your level of saving at the moment? 3.43 How much do you talk about savings, if at all? 3.44 How openly? 3.5 What are your views about saving/putting money by? 3.51 FOR EXAMPLE: If you personally won £1,000 on the lottery, what would you do with it? 3.52 Save/spend? 3.53 Would you discuss with partner? 3.54 Would you agree? 3.55 Who would decide in the end? 3.56 What would your partner do if he/she won £1,000? 3.6 Do you or your partner expect to inherit any money or assets? 3.61 What do you expect to do with these assets? 3.7 What do you think you will eventually do with any housing assets or savings? 3.71 Try to spend them all or leave some to children? 3.72 Which children?

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Section 4: Pension assets 4.1 Have you or your partner got any money in a personal or occupational pension? If yes, ask: 4.11 Kind of product (eg occupational, personal, stakeholder)? 4.12 How did it come about? 4.13 When taken out? 4.14 Links to family/lifecycle change? 4.15 An employer who hasn’t offered a pension scheme? 4.2 Why this product/provider? 4.21 Take advice? From whom? 4.3 Who made decision and who carried it out? Jointly/singly? 4.31 Agree/disagree? 4.4 Same amount of pension provision as partner or different? 4.5 Ask all: what are your/your partner’s views about saving towards a pension? 4.6 How much do you/your partner feel you know about different ways of saving for a pension? 4.7 How do you and your partner feel about your pension situation? 4.8 How much do you talk with your partner about pensions, if at all? How openly? Section 5: Borrowing/credit use 5.1 Do you or your partner currently use any of the following sources of credit? SHOW CARD B: credit/store cards, mail order, personal loans, hire purchase/ credit sale, overdraft, doorstep lenders, pawnbrokers, credit union, family/ friends, illegal lenders? If yes ask: 5.11 Is the credit in individual or joint names? 5.12 Kinds of credit used? 5.13 Why this type of credit? 5.14 What for? 5.15 How did it come about? 5.16 When taken out? 5.17 Links to family change? 5.2 Who made decision and who applied for it? 5.3 Agree/disagree? 5.4 Same amount/type of credit use as partner or different? 5.5 Have you or your partner ever faced any difficulties getting credit? 5.6 What are your views about borrowing/using credit? FOR EXAMPLE: If needed new washing machine/TV/car, how pay for? Would you discuss with partner? Would you agree? Who would decide in the end? Who would make the arrangements and repay? Would you agree/disagree on this? 5.7 How much do you feel you/your partner know about different types of credit? 5.8 How do you feel about your use of credit at the moment? 5.81 Any problems? 5.82 If yes, how did the creditor react? 5.9 How much do you talk with your partner about use of credit, if at all? 5.91 How openly?

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Section 6: Paying bills 6. Who manages/pays the following bills? SHOW CARD C: mortgage/rent, water, gas, electricity, council tax, telephone/mobile, insurance (car, home, other), etc. 6.1 How did it come about that they do it? 6.2 Do you or your partner have any current or past difficulties paying for bills? 6.21 Which types? 6.22 When? Why? How did it come about? Links to family change? 6.23 How did the creditor react? 6.24 Did you get advice? Formal/informal? Why/why not? 6.25 Sole or joint debts? 6.26 Same amount of debt as partner or different? 6.3 What are your/your partner’s views about paying bills/avoiding arrears? 6.4 How do you/your partner feel about falling behind with bills? 6.5 How much do you talk with your partner about financial situation, if at all? 6.51 How openly? Section 7: Impact of family change 7.1 So far, we have talked about many issues in relation to money management between you and your partner. I would now like to ask you what impact any family change has had on your money management. This could be either with a previous partner, or with your current partner but in the past. For example, did things change when…? 7.11 You got married? 7.12 Had your first/second (etc.) child? 7.13 When the children grew up? 7.14 When you or your partner got/lost/changed job? 7.15 You met a new partner? 7.16 Change in caring responsibilities? 7.2 PROBE FOR CHANGES IN : 7.21 Mortgage/housing assets, savings, pensions, credit use, debts. 7.22 Degree of sharing, talking, agreeing/disagreeing. 7.3 I’d now like to ask you what you think about some particular situations that some couples find themselves in, and what might happen to them in these situations. SHOW CASE STUDIES. 7.31 John and Sarah – In their forties – Lived together for 15 years – Two children together – John – Works for the local council, has local authority pension, has £3,000 saved. Sarah – Has no paid job, looks after the children, has no private pension or savings. They have been paying into a joint mortgage for 10 years. They are not married. 7.32 Ken and Margaret – In their fifties – Lived together for five years – Both previously been married and divorced. They live in Margaret’s house, which she owns outright (worth about £150,000). Ken has a company pension but also £3,000 outstanding on credit cards. Neither of them have any savings. They are not married.

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7.4 7.5 7.6

What do you think would happen to their assets/debts if they separated? 7.41 Why do you think that? What do you think should happen? Why? Would you think differently if they were married? Why?

Section 8: Current economic climate and policy/practice implications 8.1 How do you/your partner feel, overall, about your financial situation at the moment? 8.11 How financial secure or insecure do you feel? 8.2 Have recent changes in the economy affected you or your partner, financially? PROBE: Income/jobs, housing assets/mortgage, bills, debts, savings 8.3 Any concerns for the next few years in relation to possible changes in the economy? 8.4 What do you think can be done to help couples manage money (mortgages, savings, pensions, credit and debt) better? 8.41 Information ‌ advice ‌ financial support? 8.42 Who can help? Government, employers, CABs, money advice, banks, building societies, creditors, family, friends, peers? 8.43 Who would be the biggest influence in terms of financial decisions? 8.44 Family background, upbringing? 8.45 Review any particular issues that arose in the interview (eg around mortgage debt)

INTERVIEWER TO CHECK THESE ISSUES HAVE BEEN COVERED: How are assets and debts shared in the couple? Who has what? And why? How do couples make decisions about assets and debts? Who, in the couple, has the main say and why? Who has strategic control or is it shared? Who carries out any decisions/manages the assets/debts on a daily basis? How does this affect financial wellbeing? Does one member of the couple, for example, have all the stress and feel most anxiety? Thank respondent. Ask if they have any questions or concerns. Give out money advice sheet (if appropriate).

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Appendix III Complexity of private pension provision ‘I had one [private pension] at [Company A] which was tied in with the final salary, which is a good one, and that was frozen when I left. It was so good that it earned me, I was only there for three years and it probably makes up quite a lot of the pension at the moment. Then I had my own personal one when I left that, so I signed up … again that was all in the endowment kind of thing, it was the same sort of era which wasn’t very good to be honest. ‘Then I went to [Company B] and I went in their pension scheme and I transferred over my personal one, so I bought a certain amount of time in there. I left there so I’ve got two pensions really, I’ve got one at Company A and one at Company B and then drifted a bit, went into a job and didn’t set up a pension, but I wasn’t in that job very long. ‘I joined the job I’m in now ten years and joined their pension scheme. Now I put in 5 per cent, I’m making it 5 per cent. The reason I joined their pension scheme was because they put in 5 per cent, I’d have probably … I was getting to the point where I was getting a bit kind of, I’d rather have my own pots in here than put into a company pension scheme but because they were matching the amount I thought I’m just throwing money away here, so you know, I might as well join the scheme and then I was putting 5 per cent in. ‘So I’ve got that running as well, so my other one [with company A], the other one for [company B] and then I’ve got this one with ... no I’ll tell you what I did with [company A] I transferred it into the B one, so it’s all in one. So I did have the A one and that’s how I knew it was a lot because it came out in quite a lot of years and it made a lot of time. So it’s all in the B one and that’s frozen now and they’ve told me what that’s likely to be when I’m 55 and it goes up by inflation and that and now I’ve got this other now with [company C] who I work for at the moment which is growing as well. ‘So I’ve got two really, so the ones that are frozen and this one that’s growing. It’s all getting quite messy because they’ve done something recently where they put it into [pension company A] and they’ve frozen it. So we’ve now got a frozen amount which I put to [pension company B] and I’ve now got another one that’s started off and going on again, so it’s all quite complex. It feels slightly out of control to be honest at times.’

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Asset and Debt in Couples  

Report by the Provident Foundation

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