Divorced women the ‘poor relations of pensions wealth’ – Royal London

Julian Marr reports...

Women who ultimately divorce end up with less than half the property wealth of married couples and less than one-third of their average pension wealth, according to research by Royal London.

Published towards the start of the month in which relationship charity Relate has reported a surge in inquiries each year from those with relationship worries, the mutual insurer’s study suggested it is not the case divorced women have ‘made up for’ a lack of pension wealth by accumulating greater housing equity.

Focusing on those aged over 50, the research found the average divorced woman over 50 has pension wealth of £131,000, compared with £454,000 for the average married couple. Meanwhile, the average married couple over 50 has double the housing wealth of the average divorced woman of the same age – £359,000 for married couples compared with £169,000 for divorced women.

“Despite major changes to legislation implemented in the early 2000s designed to make it easier for couples to share pension rights, our research shows divorced women still lag far behind their married counterparts when it comes to pension and property wealth,” said Royal London director of policy Steve Webb.

Calling on those going through a divorce – and those who advise them – to ensure pensions wealth receives the same attention as more tangible household assets such as a family home, he added: “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.”

Royal London’s research was based on an analysis of the latest wave of the government’s Wealth and Assets Survey and looks at the pensions and property wealth of divorced women compared with married couples.

‘Less visible assets’

“When couples split up, there is an understandable focus on family issues and on highly visible assets such as the family home,” said Webb. “Very often, though, one partner will have pension rights that are less visible but can be just as valuable and people need to take expert financial advice on this crucial issue.

“Someone with long service in a final-salary type pension, for example, can have rights worth hundreds of thousands of pounds, which can be a crucial part of a fair divorce settlement. Our research shows the rules that 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.”