Divorce costs £2,100 per year in lost pension income

15th April 2015


Divorcees who plan to retire this year will be on average £2,100 worse off annually than those who have never been through a marriage break-up.

The expected annual retirement income of divorcees is £15,700 compared with £17,800 for those who’ve never been divorced, research from Prudential reveals .

A significant number of this year’s retirees  will be affected as more than one in three (35 per cent) have experienced a divorce.

The study also found that one in five divorced people retiring in 2015 are doing so with debts and that divorcees are more likely to delay retirement plans.

The average debt of divorcees retiring this year is £22,100, while those who have never divorced will carry a slightly smaller debt burden into retirement of £21,700.

People approaching retirement who have been divorced (13 per cent) are more likely to delay the date of their retirement compared with those who have never been divorced (11 per cent).

One in five (19 per cent) retirees who have been divorced expect to live in retirement with an income below the Joseph Rowntree Foundation (JRF) minimum income standard for a single pensioner of £9,500 –compared with 14 per cent for those who have never divorced.

Clare Moffat, pensions specialist at Prudential, says: “Although the emotional impact of divorce may have long passed, it could come as a shock for people to find that it continues to impact them financially into their retirement. A pension fund is likely to be one of the largest and most complicated assets a couple will have to split in the event of a divorce.

“The support of a professional financial adviser or retirement specialist should help ensure that any financial decisions taken have the least possible impact on incomes available later in life. Professional advice is particularly important in the face of the recent changes to pensions legislation and divorced retirees acting on advice received under the previous rules may want to consider seeking updated advice on any post-retirement plans they have made.

She adds: “During a divorce the costs can quickly mount up, with legal fees, the cost of setting up a new home and the effect of splitting any existing retirement savings all potentially impacting the ability of those involved to continue saving into a pension. Unfortunately divorce is most likely among those aged 40-43, the period in many people’s lives when earning potential peaks and the most valuable pension contributions can be made.”



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