Divorced women retire with pensions a quarter the size of men's

Men who divorce have a pension pot of £103,500 compared to £26,100 for women

Divorced women are retiring with average pension pots a quarter the size of men's, research shows.

The median pension wealth of a divorced man is £103,500, whereas the figure for a woman in the same situation is £26,100, according to workplace pension provider Now: Pensions.

Both fall way short of the average pension savings of a man at £156,500 and a woman at £51,000.

Although pension pots can often be the second most-valuable asset after property when people are going through a divorce, they are often overlooked. Seven out of 10 divorce settlements do not take pensions into consideration.

Additionally, divorced women are twice as likely not to be saving anything at all for retirement compared to divorced men.

If pension assets are left out of settlements this often leaves women worse off in later life.

Why does this happen?

One of the main reasons why women face a pension shortfall is that men earn, on average, more than women during their careers, so they contribute more to their retirement pots. 

Women working part-time are more likely to be in in low paying occupations. Currently 34% of divorced women work part-time.

Women are also more likely to take time out from work to raise children or care for elderly relatives.

The coronavirus pandemic is also impacting women of all ages as they are more likely to become unemployed.

According to the Institute for Fiscal Studies, mothers are one and a half times more likely to have permanently lost or quit their job since lockdown began. This, paired with many women taking on more childcare due to nursery and school closures, means that they are working and earning less.

This all plays a part in reducing how much you can pay into savings and a pension, how much employers will top it up, and how much tax relief your savings receive.

Joanne Segars, from Now: Pensions, says: “From our extensive work on the gender pensions gap, it is clear that women who are also part of other under-pensioned groups, such as those who are divorced, will see a compounded impact on their savings for later life.”

Phillip Way, partner at law firm Mills and Reeve, says: “Women contemplating divorce must ensure that they are aware of their own and their husband’s pension savings and their likely incomes in retirement.

“For many, it is all too easy to focus on the here and now in what are often distressing circumstances.  For example, many women have found that, in keeping the house in a divorce settlement and not looking carefully at pensions, they have put themselves in a poor financial position for the long-term future.”