New research suggests women face unique challenges as they prepare for retirement. Rebecca Patience, from Harrison Drury’s family team, looks at how divorce can affect pension funds.
A survey of more than 10,000 people conducted by Scottish Widows has revealed that while 56 per cent of married people would fight for a fair share of jointly owned property during their divorce, only 9 per cent of them would seek a fair share of pension in divorce. The survey also revealed that because of women choosing not to fight for a fair share of their pension provision they are losing out by £5 billion each year.
It’s thought that the average pension fund of a married couple in the UK is in the region of £132,000. The law was changed almost 20 years ago to facilitate the sharing of such funds. However, it has been revealed that pension sharing orders are only being made in 11 per cent of divorce cases. The report illustrates how this can be particularly detrimental to women.
Men are more likely to be financially prepared for their retirement. According to Catherine Stewart, a retirement expert from Scottish Widows, this is caused by a number of factors, including ‘the persistent gender pay gap, maternity leave and career breaks’.
These factors can hold back a women’s earning potential and consequently have an impact on pension savings. If women are not considering the division of pension funds during divorce, then they are potentially walking away from significant funds that could provide financial security in retirement.
Divorcing couples quite often don’t understand the powers that the court has in terms of pensions during the divorce process. It’s important for divorcing couples to educate themselves as to what options they have for their pension funds.
Legal advice should also be sought so all parties are given the opportunity to consider their options, ensuring they leave the marriage with financial security, not just in the short term but in retirement as well.
For more information on the law surrounding divorce and pensions, or any other divorce and family issue, contact Rebecca Patience on 01772 395185.