Women going through divorce could be missing out on up to £5 billion every year because they don’t discuss pensions during the process.
Pensions provider Scottish Widows has found that seven in 10 couples going through divorce proceedings don’t consider the division of pensions. This could amount to as much as £5 billion a year that divorced women are missing out on. One in 10 divorced women go on to be completely reliant on a state pension for income.
The research also found that more than half of married people (56 per cent) would fight to get a fair share of property, and one in three (36 per cent) would look to evenly divide savings.
Bizarrely, more people seem concerned about losing a pet (13 per cent) than sharing a pension (9 per cent).
According to Scottish Widows, the potential losses for women are down to the fact that women on are generally less well prepared for retirement than men. Only just over half (52 per cent) of women think they are saving adequately for retirement compared to 59 per cent of men.
Nigel Shepherd, head of family law at national firm Mills & Reeve, says: ‘Pension sharing was introduced almost two decades ago, but all too often in a divorce pensions are still not being considered 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.’
Plan for your future, married, divorced or otherwise
Divorce can be a tricky topic, and many people are quick to dismiss the possibility of it happening. And as the research shows, when divorce does happen, women are rarely properly informed or prepared on how to deal with their pension entitlements.
Catherine Stewart, retirement expert at Scottish Widows, says: ‘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 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.’
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