The family home has for decades been ‘fought over’ as the most valuable marital resource with less attention being paid to pensions which can be as if not more valuable. A Pension Advisory Group Report in 2019, updated at the end of December 2023 has helped shine a light on methods to manage a fair sharing of pensions between spouses. Professor Debora Price has also been vocal about the systemic problems of pensions on divorce. Not only is our pension system probably the most complex in the world but it is also highly gendered, largely though not exclusively favouring men. The complexity and gender imbalance combined with our discretionary financial remedy court process is a toxic blend indeed.
Research across the EU revealed a 39% average gender gap between male and female pension provision with the UK’s gap being one of the worst at 41%. No wonder, with our part time female workers culture, gig economy, childcare being seen more women’s work than a man’s and invariably lower pay for women.
Too often in some family law financial settlements it is said there are insufficient funds in the budgeted income needs of the parties to allow a future pension for a wife to be built that might match that of the husband. On the back of financial pressures often exacerbating marital break down, many women face a lower standard of living or poverty, if not during their working lives, then in retirement. As a society we need to try to address both the cultural and institutionalised gender imbalance, but it is not proving an easy task.
Many people facing a divorce have a lack of understanding about the importance of pensions. Both men and women commonly ask their legal representatives to ignore pension provision when settling their financial claims. This could be for many reasons, such as;
Alarm bells should ring in a client’s mind if their legal adviser is inviting them to sign a waiver of liability where their instructions do not address pension inequality with on average, a man’s pension today being four times more than a woman’s.
Advice Now offer lots of guidance on a whole range of issues including family breakdown and pensions. There is an animation on their website entitled Pensions on Divorce: what should you do? and they sell guides that have been designed to alert people to some of the complexities in the pensions. The Pensions Advisory Group report is an essential source for the work of independent financial advice on pensions in collaboration with legal advice and their clients.
Lawyers at Whitehead Monckton offer collaborative or court process options to clients who need help to chart the complex area of pensions on divorce following marital breakdown.
