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Women - Are you at risk of losing out on pensions?

A recent study by Scottish Widows shows that women are struggling to save for their retirement. The gender pay gap, maternity leave and career breaks are all reasons why women are behind men when it comes to their pensions savings.

The study also shows that women are not always taking into account pension assets when going through a divorce. According to the study, 42% of marriages end in divorce but only 29% of divorced couples discussed pensions as part of their financial settlement.

Women could be missing out on thousands of pounds by not discussing pensions during their divorce. Pensions can often be a couples’ biggest asset but some couples may not realise that pensions can form part of a financial settlement and can be shared between the parties.

There are three ways that a pension could be shared during a divorce:

  • Offsetting – One party retains their pensions in full whilst the other party receives other assets of equal value i.e. property, savings etc.
  • Pension Sharing – you are given a share of your ex-partner’s pension fund/s. This share becomes part of your pension pot immediately.
  • Pension attachment orders – You receive a portion of your ex-partner’s pension fund when your ex-partner retires. This is very uncommon now as you have to wait until your ex-partner retires and takes their own pension before you receive your share.

In addition, under the Pensions Schemes Act 2015, there is now freedom to access/drawdown funds from some pensions when you reach the age of 55. There are tax implications to drawing down funds from your pension but this does mean that some pensions can be utilised to provide a lump sum in a divorce settlement. 

It is important to get proper legal and financial advice when dealing with a divorce settlement to ensure that you receive what you are entitled to and to make sure that you are not necessarily left in a position of having to rely on the State Pension fund whilst your ex-partner has a substantial pension pot for his/her retirement.

On a side note, if you are not married but are cohabiting with a partner, you need to be aware that you would not be entitled to any share of your partner’s pension if you separate. If you are relying on your partner’s pension fund to pay for your retirement then you could be left with very little if your relationship breaks down and you have none or little pension savings of your own. 

If you would like legal advice regarding pension arrangements during divorce please contact Sam Hulse Family Law Solicitor on 01905 721600.

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