08 Nov 2017

Divorced women are being short-changed by millions every year

Divorced women are being short-changed by millions every year

Seven in 10 couples in Scotland don’t consider pensions during divorce proceedings, leaving women short-changed by an estimated £337million every year.

Scottish Widows has found that half of married people north of the border would fight for a fair share of any jointly-owned property, and 32% would want to split their combined savings.

Yet fewer than one in 10 claim they want a fair share of pensions, despite the average married couple’s retirement pot in Scotland totalling £109,000.

Women less prepared

Scottish Widows said that, overall, women are less well prepared for retirement than men in Scotland, with 49% saving adequately for the future compared with 69% of males.

Furthermore, two-fifths of married women in Scotland say their retirement prospects would become worse as a result of a split, compared with just 28% of men.

Even if pensions are discussed during a divorce settlement, many women in the UK are still missing out – 16% lost access to any pension pot when they split with their partner and 10% were left relying completely on the State pension.

Almost half of women in Scotland have no idea what happens to pensions when a couple gets divorced, which may explain why so few couples consider them as part of a settlement.

A fifth presume each partner keeps their own pension and 18% believe they are split 50-50, no matter what the circumstances.

Analysis

Scottish Widows said, in reality, pensions can be dealt with in a number of ways in divorce.

The starting point should always be to find out what pensions there are, what are they worth and how they fit with any other assets such as property and savings and each spouse’s needs for a home and income.

Scottish Widows added: "If an adjustment needs to be made to get a fair overall outcome on a divorce this can be done by one person keeping their pension, but the other getting more of the other assets – called 'offsetting' – or the court can make a pension-sharing order giving a percentage of one person’s pension to the other, or a combination of the two may be needed.

"Pension sharing also applies in Scotland, but with some differences. Couples can create a pension share by agreement without a court order. It is also possible to provide a specific amount, rather than the percentage approach that is compulsory in England and Wales."

Catherine Stewart, a retirement expert at Scottish Widows, said that, generally speaking, women’s retirement prospects are worse than men’s.

"The persistent gender pay gap, maternity leave and career breaks can all hold back women’s earning potential and this often impacts pension savings.

"Relationship breakdowns can leave people really vulnerable but, quite simply, they’re also throwing significant sums of money down the drain.

“It is important that everyone – whether single, married or divorced – take steps to understand their finances and prepare for their independent future should a relationship break down.

"We would urge men and women to better understand the legalities around what happens to pension pots during divorce proceedings, as often they are the second largest, if not the largest, asset a couple owns,” she added.

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