A new report shows that fewer than 15% of divorces lead to women receiving an equal share of the pension wealth accumulated.
Researchers from the Manchester Institute for Collaborative Research on Ageing and the Pensions Policy Institute analysed the pension wealth of almost 30,000 people over the age of 30.
They found that married men have the most, with those aged 45-54 having a median pension wealth of about £86,000 (compared with £40,000 for women) and those aged 55-64 having £185,000 (compared with £55,800 for women).
For those aged 65-69, the gap is even wider – in this age bracket median pension wealth for married men is just over £260,000, compared to just £28,000 for married women.
The data showed that while around 90% of couples have some pension wealth between them, in about half of couples with pensions, one partner has more than 90% of the pension wealth. Fewer than 15% of couples have pensions that are approximately equal.
“It is clear that considering pensions on divorce could have considerable impact on people’s finances in later life – especially women. Information for divorcing couples is vital,” said Debora Price, Professor of Social Gerontology at The University of Manchester. “We also need to address important questions about the long-term financial implications of divorce on pensions, and why we see such an imbalance of pension wealth within couples.”
Tim Pike, Head of Modelling at the Pensions Policy Institute said: “This research illustrates the pension inequality that persists after divorce. In most marriages 90% of the pension wealth is in the name of just one partner, almost always the husband. Of the 107,000 divorces in 2019, we know that a third of couples will reach a formal financial settlement through the courts and many others will reach an agreement about how to divide their assets with the help of lawyers or on their own.
“All of these people could in theory distribute their pension assets in a fair way on divorce, yet the research found no evidence to suggest that this was happening – divorced women have very little pension and significantly less than married women.
“This raises questions that need to be answered concerning the access to, and approach of financial remedies, whether the right people are getting the financial settlements they need and how the situation may be improved.”
For households in the top 40 per cent by household income, median pension wealth exceeds median property wealth. This is especially likely to be the case for those living outside London and the South-East of England. Any trade-offs between house and pension in divorce may not always be balanced as pension wealth can exceed property wealth for more pension-wealthy couples, especially outside London.
“Women often see the house v the pension as a trade-off but they do this in many cases without even finding out what the pension is worth and also without thinking about how they are going to live in later life,” adds Tim Pike.
“This,” concludes Hilary Woodward, the CEO of the Pension Advisory Group, raises questions that need to be answered.
“If anyone needed convincing that more needs to be done to improve pension outcomes on divorce, the evidence is here in this report.
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