The gender pensions gap is estimated to be more than twice the size of the gender pay gap. Figures from the National Retirement Forecast show that the gap in pension savings between men and women at retirement is 39% compared to the 14.3% gender pay gap. But there’s another shocking statistic – related to divorce.
Only 30% of divorcing couples include pensions in their settlement, according to figures recently released by the Institute and Faculty of Actuaries (IFoA) and Scottish Widows.
Divorce is an incredibly difficult time for all involved, so pensions may be overlooked or are simply not considered to be a marital asset. However, the family court considers pensions as an asset capable of division, in the same way as a property or savings, meaning between £2billion and £4billion per year in pension savings are not considered in divorce settlements.
A survey conducted by The Standard and Stowe Family Law revealed that women significantly underestimate the value of their spouse’s pension – a quarter didn’t know whether their spouse had a pension, and 77% did not know the value of it. 60% of divorced women did not talk about pensions in their divorce, and almost 28% stated they weren’t aware it should have been considered, according to Scottish Widows’ 2023 Women and Retirement Report.
Of course, this doesn’t only affect women. There are undoubtedly many cases in which the woman is the party with the higher pension – and pension sharing on divorce works both ways. We found there were no statistics readily available to reflect this scenario but as we hope the pay gap and pensions gap will narrow in future, this would be an interesting aspect to revisit.
There are a number of ways that pensions can be dealt with as part of a divorce settlement – including a pension sharing order where part of the pension-holder’s fund is transferred into the recipient’s sole name, or by an approach known as offsetting, where one of the parties will retain a greater share of another asset such as property.
Pensions may be boring and complicated, and yet another element to be included in divorce proceedings, but they should be considered as part of your financial future.
Building an early relationship with a financial adviser who understand you, and your vision for your financial future, can be incredibly beneficial. We spend the time to understands your lifestyle and aspirations – your short, medium and long-term financial goals and be there for you through the highs and lows of life’s journey.
To discuss how you can reach your short, medium and long-term financial goals, just get in touch with Lucy Field-Richards.