For many years Family Lawyers have been expressing concern over the peril of pension poverty, especially for women, after divorce. Recent studies from insurers Aviva and Manchester Institute for Collaborative Research have once again highlighted the issue.
At Gordons Partnership, our Family Law team routinely advise on pensions on divorce and often hear clients’ general misconceptions about pensions and divorce; both reports back up that experience.
Pensions on Divorce
Some notable facts from the reports are: Nationally, private pensions represent 42% (£6.4trillion) of all household wealth. In the case of those in the top 40% of income earners, in the majority of households, pensions are worth more than property, especially outside London.
Pension wealth is distributed very unequally between men and women in all age groups. For example, in those aged 64-69, the median value of pension funds for men is £212,000 but only £35,000 for women.
In half of all couples, one partner holds 90% of the private pension wealth.
In only 15% of couples is, pension wealth broadly equal before divorce.
The Aviva research exposed another issue that has long concerned Family Lawyers – that 34% of divorcees make no claim on their ex-partner’s pensions. Many lawyers, we included, suspect the figure is much higher.
The ONS say that the average age of men divorcing is 47, and for women, 44. It is therefore fair to assume that in most cases, pensions will be a considerable factor in the assets of many families. The statistics raise concern about whether divorcing couples are fully aware of their legal options and how decisions made now may impact them in later life.
It is also apparent that dealing with pensions is, by its nature, complex. Pensions come in all sorts of forms, sometimes with benefits that are overlooked or hard to value. Not only do we have a less than transparent state pension system, but private pensions can come in different forms such as self-invested, defined benefits, and defined contributions, and these can come in different forms like public sector and uniformed service schemes. Commonly people move jobs more often now and have a basket of pension funds. Comparing different pensions can lead to very unfair outcomes as the benefits, and their true value can easily be misunderstood.
Family Lawyers Guildford
Our experienced family lawyers can guide you through the pension maze to a fair and transparent outcome and help you avoid the pension poverty trap. If you want to learn more, please contact our family team.