New research* from the University of Manchester’s Institute for Collaborative Research on Aging (MICRA) supported by the Pensions Policy Institute, has shown that there is still significant disparity between male and female pension wealth and concludes that there is “considerable potential for pension sharing” on divorce which could substantially affect the later-life finances of many women.

The report looked at data from almost 30,000 people aged over 30 and found there was a significant imbalance in pension savings amongst men and women, and husbands and wives. In terms of private pension wealth, men aged 65-69 have a median of approximately £212,000, while the women of that age group have £35,000 in private pension savings.

Pension wealth for married couples

In the 45-54 age group, the median pension wealth of married men is approximately 86,000, while the married women of that age group have £40,000.

In the 55-64 age group, the median pension wealth of married men is approximately £185,000, while the married women of that age group have £55,800.

Pension wealth after divorce

In the 45-54 age group of divorced men who are not cohabiting, the median pension wealth was £42,000 compared to women, who have £16,000.

In the 55-64 age group, divorced men who are not cohabiting have a median pension wealth of around £100,000 while divorced women of that age have £19,000.

The disparity continues across people in second marriages, but to a slightly lesser degree.

In about half of all couples with pensions, one partner holds around 90 percent of the entire pension wealth. Couples who have similar wealth for both parties represent less than 15%.

Pensions as an asset in divorce

It was primarily the poverty of older divorced women that led to law reform in 2000 which enabled pension sharing in contested financial settlements on divorce. However, since pension sharing came into force, the uptake has been low. As of 2019, statistics from the Ministry of Justice show that, at most, only 12 percent of divorces involve pension division in some form.

The MICRA report suggests that emotional attachments are playing a part in the low uptake of pension sharing on divorce and that these attachments (men to their pension and women to the family home) may mean that women are more likely to “trade” or offset their share of the pension wealth for other assets, typically the house. Such pension offsetting, while seemingly equitable, may not allow for financial security in later life.

The report’s conclusion suggests that greater use of pension sharing, in which the less well-off party sees assets transferred into a pension of their own could achieve better long-term financial outcomes for women.

Why pension sharing is sometimes overlooked in divorce

The report suggests that solicitors are often advised to cease seeking a division of pension assets as their clients find the acrimonious nature of such a “pension fight” too costly on an emotional and personal level.

Pension sharing orders can only be granted by the courts and so are only available to those who seek a court order. It could therefore be reasonably concluded that many divorcing spouses either ignore the asset altogether or agree a pension offsetting agreement which may not provide adequately for their future.

It could also be the case that some spouses do not have complete knowledge of the potential value of the pension savings accrued by their partner and perhaps believe that as it has been accrued solely from earnings it has been ring-fenced. However, it is impossible to do so and both spouses’ pensions must be accurately valued and disclosed as part of any financial settlement on divorce.

How Simply.Law can help

Our member solicitors can bring knowledge and expertise to financial settlements on divorce. They can assist you in ensuring your receive a fair financial settlement and help you understand how best to protect your financial situation for the future. * Buckley, Jennifer and Price, Debora (2021) Pensions and Divorce: Exploratory Analysis of Quantitative Data, Manchester Institute for Collaborative Research on Ageing, Manchester