The Danger Of Overlooking Pensions And The Motherhood Penalty

In proceedings for divorce, nullity, or dissolution of a civil partnership, the court has the power to share pension savings between the parties under a pension-sharing order.

As part of the financial disclosure process in divorce, both parties should exchange financial disclosure to include details of all income, capital, property, pensions, and liabilities.

With reference to pensions, the first step is to find out how much the pensions are worth, and both parties will need to obtain the cash equivalent value of their pensions.

It can take a number of weeks to obtain these valuations, and therefore, your solicitor should assist you with this from the outset of instruction.

Once financial disclosure has been exchanged and all pension valuations obtained (bearing in mind that some individuals may have multiple schemes), it may be necessary to involve a pension actuary or pension on divorce expert.

They can provide further in-depth valuations and expert opinions to consider how pensions can be divided fairly on divorce. There are many different types of pension schemes, and their complex nature means that it is important that you seek specialist advice early on.

The 19th annual Women and Retirement Report has revealed that the ‘motherhood penalty’ – the financial and career disadvantages faced by mothers and caregivers, has an enduring impact in later life.

This is exacerbated for single mothers, who are unable to share the childcare responsibilities and costs with a partner, often forcing them out of the workplace.

The gender pension gap is calculated at 39%, which is a 39% difference in pension savings between men and women at retirement age.

If you are going through a divorce or dissolution, it is, therefore, crucial that pensions are considered as part of your financial settlement.

You may be in a position where your spouse or civil partner has a significantly larger pension pot than you, leaving you in a very vulnerable position in older age if you did not share in that pension income in divorce, as you would do if you were to remain married or as civil partners.