Wives are, on average, significantly worse off than men following divorce, according to recent findings.
London-based Opinium Research polled a representative sample of 2,750 divorced men and women for Legal and General. When post-divorce income was compared, they found an average first year fall of 41 per cent for women compared to only 21 per cent for men.
Pension savings also differ starkly according to the findings, with the women polled having saved an average of just £23,000 by the time they retired, compared to the much healthier average pension pot of £60,000 accumulated by the husbands surveyed. Despite this, according to the poll, women are almost twice as likely to not insist on a share of their ex-partner’s pension in divorce settlements.
Legal & General attribute these differences to the traditional, breadwinner role fulfilled by the majority of husbands. While they work full time and earn higher salaries, women who have had children often take on lower-paying, part time roles: about 70 per cent of poll respondents in a breadwinner role were male.
Asked if they found the cost of living a challenge after divorce, however, the differences were less stark, with 24 per cent of female respondents agreeing, compared to 18 per cent of men.
Your fair share
Retirement can already be a financially challenging time, without the additional stress of a poorly financed divorce – and yet, this is a situation that a surprising number do people do end up stumbling into. Avoid this pitfall by seeking legal advice. An experienced family solicitor will be able to provide you with a detailed overview of your options and entitlements, helping ensure you receive the assets you are entitled to. Even if your budget is limited, legal advice as a worthwhile investment that will pay dividends in the future.
Family law in England and Wales fully recognises the important role played in family life by mothers and homemakers. Such women enable the financial success of their husbands by managing domestic life and raising children, but their efforts do not generate income, making it harder for them to save their pension funds and leaving them at a significant disadvantage if the marriage breaks down and the couple separate.
A solicitor will advise on the assets, spousal and child support you may be entitled to in your family’s particular circumstances and you may find it is more than you think. A competent lawyer will also draw your attention to relevant legal provisions, such as the ability to apply for a share of your partner’s pension.
Pension sharing
Pension sharing enables the family courts to address the all-too-common scenario highlighted by Legal & General research: when the wealthier partner to a marriage has a significantly larger pension pot than their soon-to-be-former spouse.
Once issued, a pension sharing order will specify the percentage of the pension’s ‘transfer’ value to be allocated to the holder’s former spouse – that is to say, its overall monetary value. The pension assets are then immediately divided, and the share allotted to the less wealthy partner is known as a ‘pension credit’. Typically, pension credits are placed in the recipient’s own pension scheme. Not all pension schemes will allow this, however, and others may charge fees: seek specialist financial advice if necessary.
If there are no other financial ties, pension sharing may result in a ‘clean break’ settlement, in which the now divorced couple have no ongoing financial ties – a state of affairs considered ideal by most family judges. Once in effect, pension credits are a steady source of income and will not be affected by remarriage or other changes in circumstance – for example, the death of the other party.
For maximum fairness, the transfer value is often calculated just one day before the pension sharing order comes into effect. In some cases, however, the value may change before the pension credit is issued. Again, seek specialist advice if you need to.