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The study by NOW: Pensions found that divorced women’s retirement pots are around a quarter of the size of men’s. On average, women have savings of approximately £26,000 when they retire, while for divorced men the figure is more like £103,500.
In comparison to people who aren’t divorced, retirement savings are around £51,000 for women and £156,000 for men.

The figures from this latest study shine a light on a significant gap in pension wealth between men and women generally. But they also reveal that when it comes to retirement savings and divorce settlements, women are being left financially worse off than men post-separation.

So, what’s going on?

According to the report, which was analysed by the Pensions Policy Institute thinktank on behalf of NOW: Pensions, there are a few reasons why women seem to have far lower retirement savings than men.

The first is the division of assets during a divorce. Separating couples tend to prioritise the most obvious assets such as property and savings, while also sorting out arrangements for children. Pensions are often overlooked, despite the fact that pensions pots are the second most valuable asset (after the family home) in many households. There is anecdotal evidence in the report suggesting that divorcing women tend to prioritise keeping the family home in divorce settlements, in order to provide stability for children. The report states:

“For divorced women, the primary barrier to achieving adequate retirement outcomes is the division of assets during divorce and the high prevalence of pension assets not being considered within this process.

“Now, more than ever, people should engage with pensions and acknowledge them as an asset throughout divorce proceedings.”

The second barrier to women achieving satisfactory retirement savings is what they are able to pay into their pensions during their working lives. Contributing factors to this are the gender pay gap in many industries, plus more women than men taking time out from their careers, working part-time or giving up their jobs to have and care for children. Women also live around 3.7 years longer than men on average, so their pension pots need to stretch further.

Rise in lockdown divorce rates could worsen pensions outcomes for women

Experts believe the disparity between pension pots between divorced men and women may have been widened during the coronavirus lockdown. The Institute for Fiscal Studies (IFS) found that mothers are 1.5 times more likely to have lost their job during lockdown. The report explains:

“This, paired with many women taking on more childcare due to nursery and school closures means that they are working less and earning less.

“This all plays a part in reducing how much you can pay into savings and a pension, how much employers will top it up, and how much tax relief your savings receive.”

The findings of this research emphasis just how crucial it is to seek reliable legal advice during a divorce, and to make pensions a priority when negotiating a settlement. To ensure you understand all of your options and get a fair settlement, get in touch with Liverpool divorce solicitor Tracey Miller Family Law.