A few weeks ago I caught sight of a newspaper headline that read “Why do women have half the pension of men?”.

It turned out it was an advertisement for Scottish Widows, that went on to claim that on average a woman retiring today has a pension pot about half the size of a man’s pension pot.

In fact some researchers suggest that the difference between a man’s and a women’s pension is even starker, with Which? finding that men aged 65-69 have pension pots, on average, ten times larger than those of women of the same age.

I am sure there are many reasons for this disparity; the gender pay gap, more women having interrupted careers to care for children and working part time and in less senior roles, to name a few, but I am also sure that the way pensions are often ignored on divorce is also a major factor.

The ONS believe that, on average, 42% of total household wealth is made up of pension assets yet a recent study by Which? (November 2021) found that only 15% of divorcing couples include pensions in their financial settlement and a shocking 58% of those surveyed said that they had not even discussed pensions. This must result in those separating, particularly women, missing out.

There are probably many reasons for this, including:

  1. Pensions are complex and come in all different shapes and sizes. I am sure that the complexities of pensions result in those separating ignoring pensions because they do not understand their value and importance.
  2. Due to the complexities of a pension, there are often additional costs, such as those of a pension actuary, to help understand the true value of a pension and how best it should be dealt with.
  3. When going through a divorce, there is also often more of a focus on immediate needs, for example, the need to purchase a house, rather than thinking about long term financial security and income on retirement.
  4. There is sometimes a feeling that each party has contributed to their own pensions without any contribution from the other so it would be unfair to claim on the other party’s pension. However, there are often indirect contributions that are forgotten such as looking after the home and children, at the expense of that persons career, income and therefore pension, whilst allowing the other person to work more hours and get that promotion and pay rise, resulting in more pension contributions.

These reasons are all understandable, but in most cases they do not justify entering into a settlement that fails to take pensions and retirement needs into consideration, especially when pensions are often the some of the most valuable assets.

Getting your financial settlement on a divorce right effects not only your short term financial needs, but also your long term needs and it is therefore essential that specialist advice is taken before making any final decisions.

At Lupton Fawcett, we have a team of family law specialists, experienced in advising on complex matters on divorce, including issues around pensions. We can guide you through your options and direct you towards other experts, such as financial advisors, where necessary.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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