Separation and shortfalls for savings in retirement
A family lawyer is urging divorcing couples to pay closer attention to pensions. The legal expert is warning separation could see women facing a significant shortfall in their retirement savings.
Experts say inequality remains widespread. This is despite pension sharing being introduced in 2000 – and being recognised as a matrimonial asset in England and Wales.
Research from now:pensions and the Pensions Policy Institute shows divorced women face a pension gap of 61 per cent compared with divorced men, equivalent to an average shortfall of £53,160.
Average pension wealth stands at around £32,640 for divorced women, compared with £85,800 for divorced men.
‘Pensions are often one of the most valuable assets in a marriage, yet they are still frequently overlooked during divorce,’ says Rachel Buckley of The Family Law Company.
‘While the legal framework exists to share them, that doesn’t mean they are always properly considered in practice.’
Experts explain women are more likely to experience lower pension accrual due to part-time work, career breaks for caring responsibilities and fragmented earnings which can fall outside automatic enrolment thresholds.
This can result in a substantial imbalance when relationships end – especially as financial settlements often prioritise the family home, an understandable decision particularly where children are involved, but one that can create long-term inequality.
Rachel Buckley, The Family Law Company. Image: The Family Law Company
‘Awareness alone is not enough’
‘It’s easy to focus on property because it feels immediate and tangible. However, £1 of equity in a home is not necessarily equal to £1 in pension value, particularly where a pension provides guaranteed income for life.’
Courts consider pensions alongside all other matrimonial assets. It means a partner may find a percentage of their pension is transferred into the other person’s name – commonly referred to as a Pension Sharing Order.
Alternatively, a Pension Attachment Order might be granted whereby future pension payments are earmarked for a former spouse. Another outcome may see the balancing of a pension’s value against other assets.
Rachel adds that headline pension values, such as cash equivalent transfer values, do not always reflect the true long-term worth, particularly for defined benefit schemes.
‘Retirement can feel distant at the point of divorce, but the decisions made then can shape financial security for decades. Divorce is a moment of change, but it is also an opportunity to ensure future stability.’
While the issue disproportionately affects women, she emphasises pension awareness benefits both parties – and supports fairer outcomes overall.
‘The gender pension gap following divorce shows awareness alone is not enough. When pensions are properly addressed, we see far stronger long-term outcomes. When they are not, the consequences can be significant.’
