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And the study, released on Tuesday, warns that the financial impact of missing out on a share of a significant pension could be “catastrophic” in later life. The latest research by Which? has found that 71 percent of divorcees did not include pensions in their financial settlements, with women more likely to be negatively affected in the long term.
Since 2000, UK courts have allowed divorcing UK couples to share pensions – but this is not the norm.
A survey of nearly 1,000 Which? members who have been through a divorce since 2000 showed that of the vast majority who opted to pension share, nearly one in five (18 percent) had not considered the division of pensions during their divorce proceedings.
And 22 percent did not want to share their pensions at all.
But the consumer champion says that there is a risk that this problem will be exacerbated by “no-fault divorce” reforms, which could make it more difficult for some people to access legal advice in good time.
Across the board, the number of people opting to pension share is falling.
Data obtained by legal firm Nockolds via a freedom of information (FOI) request revealed that the number of divorcing couples applying for pension sharing orders has fallen by 35 percent since 2017, from 36,202 to 23,622 in 2021.
Which? is concerned that some couples are potentially ignoring one of the biggest assets in their marriage.
Leaving a large pension out of a divorce stands to disproportionately affect older women who are statistically more likely to have inadequate pension savings.
While a variety of factors are at play, recent research from Now Pensions states that on average women spend as many as ten years away from the workplace on career breaks after having children or caring for elderly relatives.
And the burden of care is not routinely split between married partners.
Lower earnings, sometimes as the result of part-time work, also mean women may be making lower contributions or earning less than the automatic enrolment threshold.
As a result, women’s pension pots can stagnate, potentially spelling disaster for a woman who divorces and does not get a share of her spouse’s pension.
The gap between married men and women’s pension pots starts early, with married men aged 30-44 having on average more than double the private pension pot of their wife (£18,760 for married men compared to just £8,604 for married women).
As you get older, the gap continues to grow, with couples in their sixties suffering from the starkest disparity in retirement savings.
According to research carried out by the University of Manchester and the Pensions Policy Institute, the average married woman aged 64-69 has accrued merely £28,000 in private pension savings, compared with £260,000 for their male counterparts.
Under the new no-fault divorce laws, introduced in April this year, one person can apply for divorce, with the court then notifying their spouse within the 20-week waiting period before the conditional order.
However, the notification can sometimes be received as late as 18 weeks into the process, leaving little time for the notified spouse to make plans or seek legal advice.
Jenny Ross, Which? Money Editor, said: “Despite the law permitting the sharing of pensions during divorce proceedings since 2000, Which? research shows that a majority of couples neglect to do so.
“Women are most likely to be negatively affected by this and the financial impact of missing out on a share of a significant pension could be catastrophic in later life.
“Wherever possible, we encourage people to seek legal and financial advice when embarking on divorce proceedings, in order to ensure they are equipped to make the best financial decisions for the future.”
Former pensions minister, Sir Steve Webb, partner at consultants LCP, said: “While the new online no-fault divorce system has many advantages, it’s vital that it doesn’t result in a focus on speed at the expense of fairness.”
Caroline Abrahams, charity director at Age UK said: “Divorcing couples failing to split their private pensions is one of the single biggest drivers of women spending their retirement living on a low income.
“All too often, the focus is on the house while the pension, which in some cases can be worth just as much or even more, gets forgotten about, meaning that one partner, usually the man, walks away with a secure retirement income while the other gets nothing.
“Major reform is needed in divorce proceedings to make sure that every couple at least gives serious consideration to splitting the pension, no matter how much or little it’s worth.”
”No guidance from anyone”
Samantha Lee said she had “no idea” that she could pension share when she was going through her divorce in 2001.
The 48-year-old from Winchester said she had no guidance from anyone as at the time divorce was a “taboo” topic and because she initiated proceedings, she felt it was “all my fault”.
Speaking to the Express, Samantha, who is a yoga teacher, said: “I had no idea that I could pension share when I was going through my divorce.
“I lost that chance and had no guidance from anyone that I could claim part of the pension for the years I was married, for my own future. Divorce was a taboo word and because I initiated the whole proceedings, I felt it was all my fault and the guilt was huge.
“Even though there were two people to blame for the breaking down of our relationship, society always blames the one that closes the door on the marriage. I was alone and moved back to my parents. Broke with no job, and moving back to the UK, I was very much on my own and had no idea what my options were.
“To me and to the people around me there were no options, and no one gave me any advice.
“I had no money to seek my own legal counsel and had to use my ex-husband’s representation. I felt lost and that this was what it was supposed to be like.
“Looking back through the years since, I understand more about the divorce situation and would have worked harder for my own representation to be heard and the scales to be fairer in our final solution.”
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