Pensions in divorce – women lose out on £5bn every year, says Scottish Widows

scottishwidowSeven in 10 couples don’t consider pensions during divorce proceedings, leaving women short-changed by £5bn every year, according to new research from Scottish Widows.

The research shows that more than half of married people (56 per cent) would fight for a fair share of any jointly owned property, and 36 per cent would want to split their combined savings. Yet fewer than one in 10 (9 per cent) claim they want a fair share of pensions, despite the average married couple’s retirement pot totalling £132k – that’s more than five times the average UK salary (£26k1 ) and just over the average price of a house in Bradford2 .

In fact, more married people would be concerned about losing a pet during a settlement than sharing a pension (13 per cent vs 9 per cent). Inadequate savings and preparation Overall, women are less well prepared for retirement than men, with 52 per cent saving adequately for the future compared with 59 per cent respectively.

This figure falls to below half (49 per cent) for divorced women, with nearly a quarter (24 per cent) saying they are unable to save anything at all into a pension, twice the rate of divorced men (12 per cent) saving nothing.

Furthermore, two-fifths of divorced women (40 per cent) say their retirement prospects became worse as a result of the split, compared with just 19 per cent of men. Even if pensions are discussed during a divorce settlement, women are still missing out – 16 per cent lost access to any pension pot when they split with their partner and 10 per cent were left relying completely on the State Pension.

Confusion around pensions in divorce Almost half of women (48 per cent) have no idea what happens to pensions when a couple gets divorced, which may explain why so few couples consider them as part of a settlement.

A fifth (22 per cent) presume each partner keeps their own pension and 15 per cent believe they are split 50- 50, no matter what the circumstances. In reality, pensions can be dealt with in a number of ways on divorce.

Scottish Widows experts said the starting point should always be to find out what pensions there are, what are they worth and how they fit with any other assets such as property and savings and each spouse’s needs for a home and income. If an adjustment needs to be made to get a fair overall outcome on a divorce this can be done by one person keeping their pension, but the other getting more of the other assets (called “offsetting”); or the court can make a pension sharing order giving a percentage of one person’s pension to the other (which could be 50:50 but often won’t be); or a combination of the two may be needed. However, pension sharing orders are made in just 11 per cent of divorces.

Catherine Stewart
Catherine Stewart

Catherine Stewart, retirement expert at Scottish Widows, said: “Generally speaking women’s retirement prospects are worse than men’s. The persistent gender pay gap, maternity leave and career breaks can all hold back women’s earning potential and this often impacts pension savings. Relationship breakdowns can leave people really vulnerable but, quite simply, they’re also throwing significant sums of money down the drain.

“It is important that everyone – whether single, married or divorced – take steps to understand their finances and prepare for their independent future should a relationship break down. We would urge men and women to better understand the legalities around what happens to pension pots during divorce proceedings, as often they are the second largest, if not the largest asset a couple owns.”

Nigel Shepherd, head of family law at national firm Mills & Reeve, said: “Pension sharing was introduced almost two decades ago, but it is clear that all too often in a divorce pensions are still not being taken into account properly or at all. The problem has been made very much worse by the fact that so few people are now entitled to legal aid and are having to negotiate the minefield of financial issues on divorce without even basic legal advice. This is storing up real problems down the line, in particular for women.


“While some pensions are relatively straightforward, others (for example public sector schemes) are complex. There is no substitute for expert legal and financial advice and the costs involved should be considered an investment.”

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