Only 15% of divorced women say that pensions featured in their settlement

With the rise of so-called “silver divorce”, couples over the age of 55 are now more likely to split up and so pensions are increasingly coming under the spotlight. How else are the couple expected to pay their way, given that life expectancies for both men and women are now well into their 80s?

Yet even so, according to the eighth annual Scottish Widows Women and Pensions Report published earlier this month, one woman in ten over 50 is ‘wholly dependent’ on partner’s retirement savings.

Just 15 per cent said pensions were discussed as part of their settlement. Why aren’t I surprised?

According to Scottish Widows, “the impact of divorce on women’s retirement is especially concerning, because almost one in ten (8%) of women over 50 are wholly dependent on their partner’s savings to fund them in retirement.” This year’s report uncovers that “this group of older women are particularly vulnerable in terms of lack of retirement provision, with the number of women over 50 without a pension nearly double that of men of the same age (28%, compared with 15%).”

Pensions have had a tough time recently during the recession. Fund values have slumped and opening the envelope with the annual results has made for depressing reading. Even though the tide may have turned, it is only turning slowly and with couples looking to share their pensions between them on divorce, the lack of one party’s pension hasnt exactly helped.

One reason may be that most women over 50 won’t have worked full time throughout their working lives and instead are more likely to have given up whatever career they had and devoted themselves to child care. The vast majority of my friends from school didn’t take up careers – in fact most never even bothered with university. Married at around the age of 20 – that’s how it was and now they are mostly grandparents of a growing brood while I was a much later mother, and my son is 24 and still in training . Work wasn’t on the agenda for my friends because in those days it was widely accepted that women had other duties such as child care. I bucked the trend, though, and I’m very glad I did.

It is interesting to consider that when I’m consulted by men, pension protection is a very important for them on the whole. Conversely women tend to think of “here and now”, protecting their current income and home and I find that a deal can be done that is satisfactory for both. Men can see that the value of their pension is likely ultimately to increase and keep pace with inflation. For women immediate satisfaction of their needs is more important no doubt because they still so the majority of the child care – even if that means inflation proofing doesn’t come along at the same pace and a pension isn’t always there for them. That’s why, when many women in settle their financial claims on divorce, they are left without sufficient pension protection. It’s an easy trap easy to fall into.

If you are on the verge of settling, don’t, therefore, end your income claims until your pension is fully in place!

I am not a pensions advisor, but if you are a woman who is wondering whether or not to invest in a pension, I can only give you a piece of the advice I got from my mum. She insisted on my sister and I having careers because that would mean we could always make sure we had some money put by for a rainy day.”

Wise advice mum!

Despite many women being dependent on their partners for their income in old age, the report finds that these precarious plans are often left unspoken. The vast majority (79 per cent) of married women say that retirement was not discussed with their partner before they married, and 78 per cent said they did not know what they would be entitled to from their partner’s pension if they divorced.

Lynn Graves, Head of Business Development, Corporate Pensions at Scottish Widows said:

“We know that the pressure on household budgets and the challenge of managing childcare and wider family responsibilities whilst balancing work, can all make it more difficult for women to save for retirement. For many older or divorced women, this can mean relying on a partner or other family members to provide support or additional income in later life. However, unforeseen events can have a stark impact on retirement plans, and it is important for women make sure they know what they are entitled to and how much they can expect to receive in retirement.”

Photo by Garry Knight under a Creative Commons licence

Marilyn Stowe

The senior partner at Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers with clients throughout the country, in Europe, the Far East and the USA.

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2 comments

Peter Moore - November 20, 2012 at 1:46pm

Unfortunately, not all legal firms are as good as Stowe when it comes to taking pensions into account in divorce settlements, which undoubtedly accounts for the worryingly low percentages revealed in the Scottish Widows survey. The number of pension sharing orders made each year is also still low compared to the prevalence of pensions generally in the UK, which suggests that either the pensions are frequently overlooked or that an inappropriately high proportion of ill-judged offsetting arrangements are made.

Rachel - November 20, 2012 at 6:43pm

At the outset of my divorce my husband told me his pension was ‘worthless’ and I believed him. Before the CETV was disclosed, against advice, I suggested that he should keep his pension and I would be happy with 60% of the available capital. In effect this would give me enough to remain in my home and I intended that downsizing in the future would provide me with a pension. He refused this offer even though he knew that his pension was worth twice the value of the house. After 2 years of legal wrangling the final court order gave me 50% capital and 45% of the pension. I managed to raise a mortgage to keep my home and I have the security of a decent pension for my old age. He argued that a single woman in her sixties would need a considerably smaller pension than he was due to get and offered me 25% of the total pension. The judge commented in his written judgement that this was a derisory offer and tantamount to discrimation. He added that my needs in retirement would be the same as my husbands and that after a long marriage we would have both looked upon the pension as our nest egg. He awarded 10% more to my husband as he had earned some of the pension prior to the marriage and this could be regarded as non matrimononial property. My advice to women embroiled in current financial disputes would be to give serious consideration to the pension and do not make any decisions until you have the CETV (cash equivalent transfer value).

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