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Women’s pensions are most affected after a divorce

Divorced women retire a quarter of the size of men, but breaking up takes a financial toll on both genders, new research shows.

Women who part with their partners reach retirement with savings of around £ 26,100, while divorced men have £ 103,500 by the time they quit work.

That hugely falls below the £ 51,000 and £ 156,500 at which women and men who are not divorced retire, respectively, according to the study published by NOW: Pensions.

The numbers highlight the huge overall gender gap in pension assets, but show that divorced women have the worst financially.

Finances after breakup: Divorcing couples often prioritize property splits and save before considering retirement

Finances after breakup: Divorcing couples often prioritize property splits and save before considering retirement

The amounts for the 65-year retirement pot size are the median, i.e. the centerpiece, figures from the Understanding Society survey that includes 40,000 households and approximately 4,000 retirees.

The study, funded by the Council for Economic and Social Research and a consortium of government services, was analyzed on behalf of NOW by the think tank Pension Policy Institute: Pensions.

“For divorced women, the main barrier to achieving adequate retirement outcomes is the distribution of wealth during a divorce and the high prevalence of pension assets that are not being considered in this process,” says NOW: Pensions.

“Moreover, divorced women are twice as likely to save nothing at all for retirement compared to divorced men.”

NOW: Pensions believe that the coronavirus pandemic could worsen women’s chances of doing something in their old age as they get a bigger hit in terms of employment, as divorce rates rise.

Do you want to divorce but cannot afford a lawyer?

Twelve ways to reduce, defer or pay your legal fees if you have little or no money. Read more here

Figures from the Institute for Fiscal Studies show that mothers are one and a half times more likely to have permanently lost or quit their jobs since the blockage began, the company said.

“This, combined with many women receiving more childcare due to the closure of kindergarten and school, means they work less and earn less.

“This all plays a role in reducing how much you can spend on savings and retirement, how many employers will supplement it, and how much tax reduction your savings will receive.”

“Since the closure began, the spike in divorce rates during this period compared to last year has seen even more divorced women fall victim to the gender gap.”

“People now have to deal with pensions more than ever and recognize them as an asset during divorce proceedings.

Married couples often prioritize real estate splitting and save before considering retirement, although they are usually the family’s second most valuable asset after a home.

Women are most likely to be punished for this because they have saved less for their retirement than men, because inequality in pay and the taking of children free from their ability to provide for their old age.

Anecdotal evidence also suggests that women will prioritize holding the parental home to provide children with stability while not worrying about pensions because they don’t fully understand their value.

A decent divorce attorney should encourage clients to talk about pensions as part of a settlement.

But last year, lawyers found a widespread lack of confidence among colleagues in the profession about how to split, and a significant portion of the unfair results.

How to split pensions fairly if you are ‘not fantastically rich’

Top lawyers addressed this issue in a legal guide published last year. Read more here.

The Pension Advice Expert Group has prepared a good practice guide to address this by deciphering the jargon of pensions and promoting fairer schemes. See the box on the right.

The small amount of previously conflicting counseling previously available focused primarily on large divorce cases.

Joanne Segars of NOW: Pensions says, “From our extensive research on the gender pension gap, it is clear that women who are also part of other under-retired groups, such as divorced, will see a greater impact on their savings for later life.

Phillip Way, a partner at Mills and Reeve law firm, said: “The survey commissioned by NOW: Pensions sheds another crucial light on the negative financial impact of divorce on women.

“Women who are considering divorce should make sure they are aware of their own and their husband’s retirement savings and of their likely retirement income.

“For many it is all too easy to focus on the here and now in often difficult circumstances.

“For example, many women have found that by keeping the house in a divorce settlement and not looking closely at pensions, they have put themselves in a bad long-term financial position.”

TOP SIPPS FOR DIY PENSION INVESTORS

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