The ‘pension pot’ is often a topic of hot area for debate in a divorce case or settlement. In the majority of cases the man has the larger pension and the woman, who may have taken a break in her career to look after the family, has a much smaller pot. Since 2000, divorce courts have taken pensions into account when dealing with divorce settlements and are now expected to put pensions ‘at their heart’. So, what does the current landscape look like and how can the imbalance be redressed?

The first bit of major research as cited by The Guardian https://www.theguardian.com/money/2021/sep/18/divorce-settlements-must-change-to-make-pension-sharing-fairer-say-experts has thrown the differences between the pension wealth of men and women into the spotlight.

The research carried out by the Manchester Institute for Collaborative Research on Ageing, was released in September 2021 and highlights some very important points.  We unpick the facts below:
Pension inequality
1. Married men have the most pension wealth and for the age group 45-54, married men have pension wealth of around £86,000 compared with £40,000 in women.  At 55-64 the gap widens with men’s pension wealth averaging at £185,000 compared with £55,800 in women.
2. The gap is still evident between second marriages.
Pension wealth in couples
1. In more than 50% of couples, one partner holds 90% of the pension wealth.
2. For couples who are in the top 40% earning bracket, pension wealth exceeds property wealth
Pension wealth after divorce
1. The pension wealth of divorced women compared with divorced men is still very apparent. Women in their 60s who are not cohabiting have on average 30% of the pension wealth of men in the same age bracket.
Pension contributions in married and divorced/non married women
1. Women between 30-50 who are not married but still have dependent children and are working, contribute less into their pension than those who are married with dependents (70% compared with 82%).  
What do the statistics tell us when it comes to divorce?
In many divorce cases the division is property versus pension which can have a greater impact on women’s finances as they get older.  Where pension wealth exceeds property wealth, the imbalance is greater.

The law changed in 2000 so that pensions would be actively considered when looking at financial settlements following divorce, and to enable orders to be made to share a spouse’s pension.  However, more than 20 years later, statistics suggest that only 12% of divorces involve the making of a pension sharing order.  This potentially still leaves the majority of divorcees (mainly women), with the risk of financial hardship in retirement.
The results of the Manchester research concluded that men have a greater emotional attachment to their pension than women.  The pension ‘issue’ in a divorce can sometimes prove to be one of the most common sticking points, with women frequently agreeing to remove the man’s pension from the equation because of the emotional distress the fight can cause.
How can we help?
Statistics tell us the facts, but we must not forget the emotional strain that a divorce puts on couples.  A swift conclusion is always the goal so that both can move on and start their next chapter.  
‘It is my belief that knowing the facts and possible outcomes, my clients are in a better place to make an informed decision on how they would like to proceed and what they believe to be a fair outcome for both parties.  I work very closely with my clients to ensure they understand the facts and their implications.  It is the best way to ensure the best outcome.’ Alison Whistler Head of Matrimonial and Family Law.
Buckley, Jennifer and Price, Debora (2021) Pensions and Divorce: Exploratory Analysis of Quantitative Data, Manchester Institute for Collaborative Research on Ageing, Manchester

Alison Whistler Solicitor

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