Women who divorce are missing out on tens of thousands of pensions assets because their legal settlement ignores retirement savings, research from Stowe Family Law has shown.
A survey of 400 women found that over two thirds of those who divorced did not get a legal financial settlement and of those who did, 59 per cent did not get a share of the other party’s pension. A further 12 per cent aren’t sure whether they did.
The firm says that in around half of couples, 90 per cent of the pension wealth is held by one partner, usually the husband, leaving women at a financial disadvantage and increased risk of poverty in retirement if the marriage ends.
Lawyers from the firm are calling for pensions to be made a compulsory part of financial proceedings on divorce to make sure women do not miss out on significant retirement saving pots on separation.
Yesterday the Pensions and Lifetime Savings Association (PLSA) updated its pension sharing on divorce guidance to offer more information and support for private occupational pension schemes, giving advice to clients going through divorce.
This guidance update is an opportunity to refocus on the reality faced by many couples where there is disparity in pension wealth, and how pensions can play a key role in divorce financial settlements.
Stowe Family Law partner Matthew Taylor says: “The updated PLSA guidance on pension sharing on divorce provides further welcome clarity to what can be a complex area.
“Dealing fairly with pensions on divorce remains an often overlooked area for separating couples, with those who attempt a DIY divorce most likely to run into problems. Only 12 per cent of financial orders on divorce contain a pension sharing order, and it remains all-too-common for parties, usually the wife, to ignore claims against their spouse’s pension or forego claims due to a desire to retain the family home.
“While this can be a sensible approach, many fail to understand the true value of the pension share they are giving up, and women are at risk of trading a long-term guaranteed income for short-term stability.
“The average disparity between men and women’s pension assets is 56 per cent, primarily due to higher rates of part-time work for women and the gender pay gap. This leaves women getting divorced facing significant financial disadvantage if they do not bring any pensions into consideration.
“Divorcing parties must ensure they educate themselves on their financial claims following divorce, and take advice – both legal and financial – to ensure they are considering not just their current financial position, but what the future will look for them over the medium and long-term. It is high time that pension sharing orders became a central part of these conversations.”