Men often say they feel ‘cheated’ when a Court awards a portion of their pension pot to their estranged/ex-wife through a Pension Sharing Order. Yet there is good reason why such Orders are made - due to social circumstances, men generally accumulate larger pension pots than their spouses.
A recent joint report published by the Manchester Institute for Collaborative Research on Ageing and the Pension Policy Institute, suggests men aged 65-69 accumulate a pension pot on average more than 6 times that of their spouse’s. Men in the 55-64 years bracket have on average 3 times more pension wealth, and those in the 45-54 age bracket have more than double that of their partner.
The main reason for this pension wealth disparity is that women are more likely to take a career break to raise children, whereas a 60-year-old male could build up 40 uninterrupted years of pension contributions. Additionally, the gender pay gap means that women’s annual pension contributions are likely to be smaller.
Why is this important? It is important because pension pots are generally treated as a “matrimonial asset” to be divided between the parties in a divorce settlement. But whilst the usual starting place for dividing total combined assets is a 50/50 split, the total sum and division of pension pots is somewhat more complex.
There are many considerations - and arguments, when splitting pension pots. For example, actuaries suggest women live longer and therefore may need more pension income on retirement, or one party might put forward more counter arguments than the other, such as it being unfair to take away what they have worked for.
Often, divorce solicitors acting for the parties are able to reach an amicable settlement, but, in some cases, it is necessary to ask the court for a Pension Sharing Order whereby the court will decide how the pensions pots should be divided. A Pension expert or actuary is usually necessary to correctly calculate a fair percentage division of the divorcing couple’s pensions.
Contrary to some common beliefs, divorce does not end your financial ties - for that you need a court approved financial consent order to give you the protection of a ‘clean break order’ and prevent any future financial claims if this is felt appropriate by the court. Choosing a solicitor who specialises in financial arrangements will ensure you achieve the best possible financial outcome in your divorce.
