Divorced women have a third of the average pension wealth

havenifa

havenifa


Posted on: 10th Jan 2019

Those who are going through the process of divorce are being urged to seek financial advice. This is due to the fact that women end up with less than half the property of wealth of marries couples. What’s more, they receive less than a third of the average pension wealth, according to research.

Why divorced women have a third of the average pension wealth

According to the latest Wave of Wealth and Assets Survey by Royal London, undertaken between 2014 and 2016, concluded that the average divorced woman over the age of 50 has a pension wealth of £131,000. This is around a third of the average married couple, which is £454,000.

The mutual insurer is encouraging those who are going through the process for a divorce, and those who advise them, to ensure that pension wealth receives the same attention as tangible household assets such as a family home.

Complexity and confusion

The value of a pension can be rather difficult to understand. However, if people may find that its complexity is rather off-putting, they risk missing out on a fair share of highly valuable household assets. The research also concluded that women who are divorced no not make up for a lack of pension wealth by accumulating greater housing equity.

The average married couple over the age of 50 has more than twice as much as much housing wealth than the average divorced woman of the same age. Married couples have around £359,000 whereas divorced women have around £169,000.

Considering priorities

According to Steve Webb, former pensions minister and director of policy at Royal London, when couples part ways there is an understandable focus on family issues, as well as obvious assets such as the family home.

He said: “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.”

Webb also argued that legislation changes that were implemented in the early 2000s are “failing to deliver equity”. This is despite the legislation being designed to make it easier for couples to share pension rights.

“Divorced women are ending up as the poor relations when it comes to pensions wealth in later life,” he argued.

Co-dependency

Recently published research by Age UK shows that 70 per cent of couples don’t bring up the topic of pensions prior to a divorce. What’s more, 40 per cent of women between the ages of 55 and 70 were dependent on their partner’s income for a decent retirement. Gem Durham, an independent financial adviser at Obsidian, said that people are often too late when it comes to seeking financial device after the divorce process.

She said: “A lot of solicitors are up to speed, but many of them still really need educating in the value of pension assets. Unfortunately, many solicitors still see IFAs as non-professionals and salespeople, rather than experts who can help them with the process.”

Haven IFA are here to help

Going through a divorce does not only being emotional stresses, but financial issues will also play a role. Covering all bases is important to ensure that you are not left without the necessary financial support for when you are on your own. Talking to an independent financial adviser such as someone from Haven IFA can certainly help. To learn more about our services, get in touch.