Divorced women lose out on £5bn in pension payments each year – make sure you’re not one of them!
Recent research conducted as part of the Scottish Widows’ annual Women and Retirement Report has found that 24% of divorced women are not currently contributing to a pension, while 71% of couples do not discuss pension arrangements during divorce proceedings.
One of the main reasons why pension experts consider that this is happening is there is a general lack of knowledge around the legal considerations of access to pensions during a divorce. The study showed that 48% of women admit they have no idea what happens to pensions upon divorce and only 22% said that they would even consider discussing pensions during separation.
Pension savings between separating couples can often be a sizeable asset in the matrimonial ‘pot’ and therefore it is vital that parties going through separation do not ignore pension funds during financial negotiation. Professional advice should be obtained from the outset in order to reduce the number of women with pensions disproportionately affected by divorce.
Catherine Stewart, retirement expert at Scottish Widows, has commented that women are generally less well-prepared for retirement due to factors such as the gender pay gap, maternity leave and career breaks. She has further recommended that women ‘invest some time and money in getting advice’ and stated that ‘by spending a little bit on advice to understand what’s best for them, it could actually be a good investment of their money’.
The options available to couples in respect pension funds upon divorce are as follows:
- Offsetting – couples may agree to ‘offset’ the value of the pension against another asset, such as obtaining a greater share in the former matrimonial home.
- Attachment– a pension attachment order redirects part or all of a member’s pension benefits to their former partner when it comes into payment.
- Pension Sharing – this enables the court to share a pension at the time of divorce so that a percentage share of the member’s pension scheme is transferred into a pension scheme in the name of their former partner so that each party has a separate pension fund to which they can contribute in the future.
Dealing with pensions upon divorce can be complex. Please contact a member of our team today on 0161 927 3118 to discuss your situation.