A new report has found that men have substantially more private pension wealth than women, which may pose challenges when they divorce.
In October 2019, Shoosmiths commissioned research to understand the gender gap in pensions and we found that a third of married couples and those in civil partnerships did not know that they were entitled to a proportion of their spouse's pension on divorce.
At the time, Royal London Insurance found that divorced women in their 60s had an average personal pension value of around £26,100, while a divorced man of the same age had an average personal pension value of around £103,500. This meant that in 2019, divorced women were retiring with 25% of the pension wealth the equivalent man was. Two years on and the University of Manchester and the Pensions Policy Institute have published a new report finding that not much has changed.
The University of Manchester's new report finds that there is still a substantial disparity in private pension wealth between men and women. One of the starkest statistics is that in the 65-69 age bracket, just as retirement age is reached, the median pension wealth for a man is £212,000 compared to £35,000 for a woman. This means that the average woman retires with 17% of the pension wealth that the average man does.
In the context of marriage, the report found that in around half of married couples who did have pensions, 90% of the wealth was held by one party. Less than 15% of couples have approximately equal pensions. In the context of divorced couples, divorced non-cohabiting women between the ages of 55-64 had a pension pot of £19,000, with divorced non-cohabiting men of equivalent age having £100,000. This means that a divorced woman is retiring with 19% of the pension wealth the equivalent man is, a decrease from 25% in 2019.
It is clear that pension inequality remains a major issue and this new report highlights the importance of considering pensions as an asset on divorce. A full copy of the report can be accessed here.
At Shoosmiths, we can assist clients in understanding their financial entitlement on divorce and can provide practical advice on the options available, including how pensions are treated.
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