07 January 2019

As 'divorce month’ strikes, new research shows divorced women are ‘pensions poor relations’

4 min read

 
Steve Webb - Director of Policy

Steve Webb

Director of Policy, Royal London

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  • Relationship charity Relate report a 24% surge in inquiries in January each year from those with relationship worries;
  • New research from mutual insurer Royal London shows that women who eventually divorce end up with less than half the property wealth of married couples and less than one third of the average pension wealth; for example, the average divorced woman over fifty has pension wealth of £131,000 compared with £454,000 for the average married couple;
  • Royal London urges those who are divorcing to recognise the value of pension wealth and to take expert financial advice to ensure that divorced women do not continue to be ‘pensions poor relations’

With relationship charity Relate reporting a surge in inquiries in January each year, new research from mutual insurer Royal London has shown that divorcing women are continuing to lose out when it comes to sharing pension wealth after divorce. Despite major changes to legislation implemented in the early 2000’s designed to make it easier for couples to share pension rights, Royal London’s research shows that divorced women still lag far behind their married counterparts when it comes to pension and property wealth.

The company is encouraging those going through a divorce, and those who advise them, to ensure that pensions wealth gets the same attention as more tangible household assets such as a family home. Understanding the true value of a pension can be a complex business, but if people are put off because it is seen as ‘too difficult’, they risk missing out on a fair share of highly valuable assets of the household.

The research is based on analysis of the latest wave of the government’s Wealth and Assets Survey (WAS), and looks at the pensions and property wealth of divorced women compared with married couples.   Focusing on those who are aged over fifty, the key findings are: 

  • The average married couple has *three times* the pension wealth of the average divorced woman; the respective figures are £454,000 for the average married couple aged over fifty compared with just £131,000 for the average divorced woman;
  • It is not the case that divorced women have made up for a lack of pension wealth by accumulating greater housing equity;  in fact, the average married couple over fifty has *double* the housing wealth of the average divorced woman of the same age;  the figures are   £359,000 for married couples compared with £169,000 for divorced women;

 Commenting, Royal London Director of Policy Steve Webb said: 

‘When couples split up there is an understandable focus on family issues and on highly visible assets such as the family home.  But very often one partner will have pension rights which are less visible but can be just as valuable and people need to take expert financial advice

on this crucial issue.  For example, someone with long service in a final-salary type pension can have rights worth hundreds of thousands of pounds which can be a crucial part of a fair divorce settlement.  Our research shows that the rules which allow for pension rights to be

shared after a divorce are failing to deliver equality.  Divorced women are ending up as the poor relations when it comes to pensions wealth in later life.’

- ENDS -

For further information please contact:

Steve Webb, Director of Policy, Royal London

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.