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Majority of pensions not split upon divorce

Paloma Kubiak
Written By:
Paloma Kubiak

Seven in 10 divorcees do not split their pension, with women left at greater risk of retirement poverty, research reveals.

Since 2000, divorcing couples have been able to share their pensions. But a survey of 1,000 people who have been through divorce in the past two decades revealed that of the majority who did not share their pensions, one in five hadn’t considered this as part of the financial settlement.

For one in five, they did not want to share their pensions, according to the survey by consumer champion Which?.

And recent data obtained by legal firm Nockolds revealed that the number of divorcing couples who applied for pensions sharing orders has fallen 35% since 2017. This takes the number from 36,202 to 23,622 in 2021.

Which? said divorced women are at greater risk of retirement poverty, and given the new ‘no-fault divorce’ rules, it would make things worse.

It said it is concerned some couples are potentially ignoring one of the biggest assets in their marriage.

“Leaving a large pension out of a divorce stands to disproportionately affect older women who are statistically more likely to have inadequate pension savings”, Which? added.

This is because women tend to spend time away from the workplace looking after children and/or elderly relatives, as well as lower earnings because of part-time work.

Which? said the gap between married men and women’s pension pots starts early, with married men aged 30-44 having on average more than double the private pension pot of their wife (£18,760 for married men compared to just £8,604 for married women).

And the gap continues to grow with age, with couples in their sixties suffering from the starkest disparity in retirement savings.

According to research carried out by the University of Manchester and the Pensions Policy Institute, the average married woman aged 64-69 has accrued £28,000 in private pension savings, compared with £260,000 for their male counterparts.

‘Divorce is a dirty word’

Samantha Lee, 48, lost out because she was unaware of pension sharing orders. She told Which?: “Divorce is a dirty word. It’s a very isolating experience and no one advised me to get legal counsel. I  had no idea I needed to protect myself. But more than that, I didn’t feel entitled to anything.”

Which? also heard from a woman in her sixties whose husband filed for divorce after 34 years of marriage. While he had built up a substantial defined benefit scheme (final salary pension), she had worked part-time for most of the marriage, leaving a significant disparity in their respective retirement funds.

After a recommendation to seek legal advice, she decided to pursue a pension sharing order, which was finally granted eight years on from the original divorce filing. While legal advice proved to be key in this particular case, as many as one in three of Which? members surveyed admitted they did not seek professional advice during their divorce.

Which? said that while many people may be deterred from a pension sharing order as they believe it will financially tie them to their former spouse after the divorce is concluded, this is usually not the case. A percentage of the pension pot is usually transferred at the point of divorce. Less frequently, an attachment order may be applied. In these cases, the share is paid as a kind of maintenance, which ends in the event of the former spouse’s death.

Jenny Ross, Which? Money editor, said: “Despite the law permitting the sharing of pensions during divorce proceedings since 2000, Which? research shows that a majority of couples neglect to do so.

“Women are most likely to be negatively affected by this and the financial impact on missing out on a share of a significant pension could be catastrophic in later life.

“Wherever possible, we encourage people to seek legal and financial advice when embarking on divorce proceedings, in order to ensure they are equipped to make the best financial decisions for the future.”