Danielle, from Hertfordshire, was blissfully happy when she sold her flat and moved into her dream home with her husband and their one year-old-daughter in 2014. But just four months later, he came home from work and announced he was leaving.
Her ex, who worked in advertising, was always the higher earner, particularly after Danielle took two years of maternity leave to care for baby Isabella, who was born with health complications.
Despite their financial imbalance, Danielle had never thought to future-proof her bank account.
In their year-long divorce, her priority was her daughter’s welfare and getting a roof over their heads. The word ‘pension’ was only briefly mentioned, she says, then ‘brushed over’ by her solicitor.
She walked away without securing any access to her husband’s retirement funds.
‘I could have got tens of thousands of pounds in pension money, but at the time, I just thought pensions were something for old people,’ Danielle, now 46, tells Metro.
‘I’m so frustrated with myself that I didn’t look into it more.’
Around 100,000 couples get divorced each year in the UK and shockingly, pension assets are not divided in 71% of cases, despite them being the second-largest marital asset after property.
New research from the Pension Policy Institute (PPI) and now:pensions, shared with Metro, reveals how divorced women have £400,000 less in pension savings than divorced men.
While a pension pot for a divorced man typically hits £550,000, divorced women are left with just £160,000 for retirement.
This huge gulf is caused by three major factors: the general gender pay gap, women losing pay during maternity leave, and women being more likely to work part-time, both during marriage and after divorce.
Danielle is sadly a textbook case. Her ex moved abroad shortly after they sold their family home, and though he sent child maintenance, she struggled to keep up with rent and bills.
‘Every single penny that I had went into Isabella – clothes, nursery, nappies,’ she says.
The mum found a local job in recruitment, but as the main care provider, she’s spent the decade since limited to part-time roles that fit around nursery or school hours.
‘It’s actually much harder now she’s older,’ explains Danielle, whose daughter is now 12. ‘She doesn’t want to go to a childminder anymore. She has her own social life, dance classes, swimming and gymnastics. In the end, I had to go freelance. It’s impossible to find a full-time job or even a part-time job that works around all that.’
The new research found 30% of divorced women work part-time, three times the rate of divorced men (10%), and earn 37% less on average (£31,279 vs. £45,540).
Like thousands of others, Danielle has never paid into a private pension, always signing up to the minimum auto-enrolment at work so her salary covers monthly outgoings.
But a lower earning capacity means some women are even excluded from this scheme. ‘Automatic enrolment pension saving dictates that individuals must be aged 22 and over and earn £10,000 in a single role,’ explains Joanne Segar from now:pensions. Divorced women are twice as likely to be excluded from automatic enrolment, compared to men (6% vs. 3%).
The result? Hundreds of thousands of women will enter retirement on the poverty line.
With men expected to live to 79 and women to 83, assuming retirement at 66, pension wealth must last around 13 years for men and 17 years for women. This means women’s annual pension income sits at just £13,893 – just over the UK’s minimum retirement living standard of £13,400. For comparison, a divorced man’s pension income is £18,573 per annum.
What are your pension rights during and after divorce?
Pensions aren’t automatically split 50/50 in a divorce, explains family solicitor Grant Stephens.
‘In England and Wales, pensions are treated as a matrimonial asset and are considered alongside other things such as property, savings accounts and other finances,’ he tells Metro.
‘The court takes into account for instance that one partner potentially would have stayed home to look after children, or earned less due to maternity/paternity leave. The court will also take into account that one party’s earning capacity is less than the other’s and therefore, can’t make as much of a contribution to a pension as the higher earner.
‘In such circumstances, the court can make an order over the pensions that can divide the pension pot fairly between the parties, regardless of whose name the pension is in.’
Anyone seeking a divorce should ensure pensions are brought to the table. As Grant puts it: ‘If a solicitor doesn’t address pensions then this is not the solicitor for you.’
You can also instruct a PODE (Pension on Divorce Expert) to dig into your entitlements.
How much money do you need to save in a pension?
A couple will need to budget for around £60,600 a year to live comfortably, the Pensions and Lifetime Savings Association said. The figure is £44,000 for a single person. Read more here.
Danielle isn’t sure how much money she currently has in a pension and is planning to seek expert help to consolidate her money. However, she knows it’ll be less than her ex.
‘I’ve got tiny pensions scattered about because I had to take part-time jobs,’ she explains. ‘He’s worked for the same company for 20 years and was always contributing to savings.’
Does she think she’ll have to work beyond the current projected retirement age of 68?
‘Excuse my French, but I f**king hope not!’ she laughs. ‘I mean, unless I win the lottery… It’s a very scary question.’
Can you claim pension funds once a divorce is settled?
‘Once a settlement has been confirmed, it’s usually the final decision,’ explains Grant. ‘However, it is possible to reopen a case, but it can only be done in extremely limited circumstances, such as whether there has been material non-disclosure of finances, a fundamental mistake at the time the agreement was made or if there was any fraud.
‘If pensions were never disclosed in the initial settlement and it can be proven with strong evidence, there are likely to be grounds to challenge the settlement.’
Danielle’s advice to others? ‘Make yourself aware of everything to do with joint pensions, auto enrolment and private pensions, and how that affects you whilst you’re going through a divorce.
‘If I had my time again, I would bring it up with my solicitor. If you are married, you’re entitled, and you need to research it.’
