Monday 4th December 2021 marked ‘divorce day’ for many couples. In light of this, Legal and General have warned that women are significantly more likely to waive any rights they have to their partner’s pension as part of a divorce settlement than men are.
Over a quarter of women give up their pension rights
Research published by financial services provider, Legal and General on 4th January found that 28% of women would give up their pension rights during divorce proceedings, compared with just 19% of men.
Legal and General have warned that this could have a significant long-term impact on personal pension wealth, with the Office for National Statistics (ONS) warning that women tend to have less personal pension wealth than men.
The data presented by Legal and General has found that men who are below state pension age tend to have a higher median active pension wealth than women. Men have an average of £25,300 in median active pension wealth compared to women who have just £20,000. However, for men aged over 65 years of age, the median pension wealth for pensions in payment is double than that of women. Men have on average £223, 933, compared to women who have just £112,967.
Divorced women see household income fall by a third
Legal and General went on to warn that women are likely to see their household income fall by at least a third in the year following their divorce. This is twice as much as men, who see their income fall by around a sixth following a divorce. This could be explained by the fact that women, on average, tend to earn less than men with 74% of households claiming that the man is the primary earner.
Divorce rates spike on the first working Monday in January
This research conducted by Legal and General coincides with “divorce day”, which is typically the first working Monday after the Christmas break. On this day, divorce lawyers typically see an uplift in the number of couples considering a divorce.
CEO of Legal and General financial advice, Sara McLeish explains that “divorce day is an important time for legal professionals to reinforce the importance of considering all options when dividing financial assets to make sure things are done as fairly as possible. Whilst it is understandable that most people are keen to reach a settlement and move on, research does indicate that all too frequently people overlook the mutual value of their pensions. This, in turn, can have a particularly harsh financial impact on women.”
Sara McLeish of Legal and General also explains that: “Only 3 percent of people seek financial advice as part of their divorce but doing so can help ensure the separation is more likely to be fair and equitable, leaving all parties in the best shape to pursue the next chapter in their lives.” This is why it is so important to seek professional financial advice as part of divorce proceedings from an impartial IFA, such as Acumen Financial Partnership.
Independent financial advice from Acumen
Here at Acumen Financial Partnership, we understand that undertaking divorce proceedings is an emotional time and that in most cases we have so much to consider that pensions are often overlooked.
However, it is vital that you understand the importance of all of your financial assets when it comes to divorce. Here at Acumen Financial Partnership, our team of impartial Independent Financial Advisors can help you to understand all of your financial assets and how to allocate these most fairly during a divorce. Contact us today to find out more.