Women, pensions and divorce
Fiona O'Sullivan looks at women's right to a share of pension assets following a recent report on women and retirement by Scottish Widows.
The recently published report by Scottish Widows on women and retirement illustrates the stark fact known to most family law practitioners which is that women often underestimate the value of securing a share of pension assets in a divorce settlement.
42% of marriages unfortunately now end in divorce. The report highlights that of those divorcing couples, 71% do not discuss pensions as part of their divorce settlement and the most recent figures available from the Ministry of Justice show that pension sharing orders are made in just 11% of divorce cases.
An obvious priority for a woman who may be the main carer of the children will be to secure a home for them. However without information as to the orders that a court can make in a divorce settlement, many women wrongly believe that they cannot share in pension assets because they are only realisable later in life. Surprisingly the research carried out by Scottish Widows revealed that couples are more concerned about losing a pet than seeking a fair share of pension.
The tragic impact of this lack of information is that of the women interviewed by Scottish Widows, 10% who lost access to pension claims in a divorce settlement intend to rely completely on state pension for income in retirement which is a ticking time bomb for governments of the future.
The frustrating feature of this problem is that in many cases a fair division can be achieved without undue complications provided couples have the necessary legal information to be aware of claims. We have recently been consulted by a woman did not make a claim on pension because she did not have the benefit of expert legal advice and her husband told her (incorrectly) that she could not make a claim because the pension was not yet in payment.
In financial remedy proceedings, the Court will look at the extent of the parties’ financial assets and divide them in accordance with what is considered fair. Pensions are part of this assessment and the starting principle is that any contributions made to pension funds during the marriage should be divided equally between the parties. This can be done with a Pension Sharing Order, which takes a percentage from the pension fund of the wealthier party and transfers it into a pension belonging to the less wealthy party. The two pensions then stand alone and the parties are free to deal with them as they see fit, completely independent of the other party.
With an increasingly aged population, now must surely be the time to build in a level of protection for divorcing couples to insist that pensions are highlighted as an asset which must be divided fairly.