In the unfortunate event that you are going through a divorce, it is important that you understand the legalities about what happens to your pension pot.
Some worrying statistics were highlighted in a recent Scottish Widow’s Women and Retirement report which showed that many women’s retirement plans may be at risk. Of the 10,314 adult women they surveyed, they found that 48% were totally unaware of what happens to their pension when a marriage breaks down.
As you’d expect, once you’ve been through it, the understanding of the impact increases. 40% of divorced women said their retirement prospects deteriorated as a result of the split, while 10% said they were now relying on the State Pension to provide an income in retirement.
The facts are that women going through a divorce are collectively missing out on more than £5 billion a year in pension payments simply by not getting the right advice. Finding out what you may be entitled to could make all the difference.
Catherine Stewart, retirement expert at Scottish Widows, said: “Relationship breakdowns can leave people really vulnerable, but, quite simply, they’re also throwing significant sums of money down the drain.”
Following a divorce, the non-earning spouse, typically female, could end up with a very low pension. In the report from Scottish Widows, 24% of women said they are unable to make any contribution towards their retirement savings following the break-up of their marriage.
Couples also at risk
Very few couples prioritise saving an equal share of the combined retirement savings, and as a consequence, a huge 71% of couples gave no consideration to pensions.
Ms Stewart at Scottish Widows concluded by saying:
“We would urge men and women to understand better the legalities around what happens to pension pots during divorce as often they are the second largest, if not the largest, asset a couple owns.”
Get in touch
If you need to discuss your finances with an adviser, please don’t hesitate to get in touch on 01483 205890.
Further information – The State Pension and Divorce / Dissolution