Almost one in five women stop paying into a pension after a divorce

16th April 2013


Nearly one in five or 19 per cent of women have stopped paying into a pension altogether after getting divorced and a quarter reduced their savings after getting divorced, according to research by insurance company Phoenix Group. The research also found that two in five divorced women (42%) say they are worse off financially after divorce. Additionally, half of divorced women made no contributions at all to a pension scheme whilst married, but only one in six had rights to a pension through their ex-husband.

Phoenix Group spokeswoman Shellie Wells says: “It is clear that divorced women face an uncertain future in retirement,”   “Not only have many given up rights to their husband’s pension provision, they have often stopped paying into their own pension plan; dipped into savings and at worst, lost contact with any savings they have accrued.”

“It’s vital that women take action now to ensure that their long-term financial security is provided for and that those going through a divorce really understand their family finances and what they are entitled to, preferably seeking expert advice, as our research found that 26 per cent of couples opt for a DIY divorce and risk losing out in their divorce settlement.”

Data from the Office for National Statistics shows that single including divorced women pensioners are worst off in terms of income.  In 2010-2011 single female pensioners had a mean gross monthly income of £1209, compared with £1495 for men and £2643 for couples.

The research also revealed that amongst divorced women 38% who had pensions arrangements during their marriage don’t know what happened to their pension pot when they divorce. It found that 66% of female divorcees over 40 rely on the State pension in retirement, only 29% rely on their savings and 12% on their investments.

One in five say they have no idea at all about their pension provision since their divorce.

Thirty-eight per cent have no idea what settlement they received following their divorce.

Six per cent received pensions sharing order or a pension earmarking order

Alex Davies, private client partner at solicitors Cripps Harries Hall, says: “One aspect that is often looked at on divorce is the fact that, in line with the Welfare Reform and Pensions Act, which came into force in 2000, a spouse will always be able to have a claim on the pension.  What sometimes will happen is that spouses will split all the pensions in two, or decide to trade off, meaning that one will keep all or most of their pension but may give the other a bit more of the house or other assets to compensate them. Pensions are always taken into account if either party has one”.

“When dealing with divorces, one surprising factor is always the high number of people, both men and women, that know very little about their own financial affairs and how to manage them.  One of the challenges for people going through divorce is how to get to grips with their finances in a way they perhaps haven’t had to previously.  Divorce can’t always give financial security, but does often give greater certainty and is an opportunity to gain control in most instances.”

Wells adds: “We’ve had a number of issues where people have divorced but, because we have not been alerted at the time people have had to chase down ex-spouses for signatures before proceeds can be released.  If the policy is not specified in the divorce order, a divorcee should assume that they have no rights to the policy – so if you’ve taken out a policy jointly or for your children, you need to ensure that ownership is specified.

“I would urge anyone who has divorced to check through their paper-work and ensure that providers of financial products taken out when they were married are aware of the divorce and have the court’s decision along with relevant paper-work on their records. This will prevent a shock when you come to draw down a policy.”

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