The annual Scottish Widows Women and Retirement Report, now in its 13th year was published in November. A copy of the report is available here. But be warned, it doesn’t make good reading.
The survey highlights that on average, women have savings pots half the value of men.
There are several reasons for this:
- The ever present gender pay gap: if women are paid less than men, it naturally follows they will save less.
- Women will, on average, have more time out of work than men due to maternity leave, part-time working, and child or elderly relative care issues. When income is reduced savings are going to be the first to suffer
- Auto Enrolment (where your employer will contribute to a pension on your behalf) requires a minimum annual salary of £10,000. Many women have more than one part time job, each job paying less than £10,000. As a result, these women are excluded from Auto Enrolment.
None of the above are surprising. But what shocked and surprised me was that 7 out of 10 divorcing couples said they did not consider the pension when discussing their divorce settlement.
There are many options for dealing with pensions on divorce: See Pensions and divorce: what are the options?
For some of these women it may be that the pension was dealt with by offsetting, whereby one spouse takes, for example, the full value of the matrimonial home and the other spouse takes the full value of the pension.
So, it may be that the pension was discussed but the wife has forgotten the details and all she remembers is that she didn’t get a share of her ex-husband’s pension.
However, what is more worrying is that potentially the 2 spouses reached agreement between themselves without discussing the matter with solicitors. In this instance it’s very likely a pension was ignored possibly because at least one spouse didn’t really understand the implications.
Would you ignore a sum of cash sitting in a bank account? Of course, you wouldn’t. If your spouse has a pension it’s included as part of the joint assets and it must be considered as part of the settlement discussions.
Certainly, don’t ignore a final salary pension. If your spouse has a final salary pensions of say, £10,000 per annum that may not sound an enormous sum compared to, for example, the value of your house. But on an annual pension of £10,000 the value of the final salary pension could be at least £300,000. You definitely wouldn’t ignore a bank account valued at £300,000. Make sure you treat the pension in a similar way.
Even where you are keen to keep professional fees to a minimum, this is one area where getting professional advice should be considered to be an investment, rather than a cost. Without it, you may not reach a fair split of the assets.
If you’d like to discuss your finances with me, please email me on firstname.lastname@example.org