In my last article, I talked about the Chartered Insurance Institute’s Insuring Women’s Futures programme, and their ‘6 Moments that Matter’ in a woman’s financial journey, including making and breaking relationships. You may have noticed divorce in recent headlines – no, not because the lockdown has been testing the mettle of couples across the UK, but due to the landmark changes to divorce legislation currently working their way through government.
But with divorced women retiring with savings 75% smaller than male counterparts, what does the new Bill mean for women’s financial futures?
SHAKING OFF THE ‘BLAME GAME’
The Divorce, Dissolution and Separation Bill (or ‘No-fault Divorce Bill’) has just gained Royal Assent, and is set to come into play in autumn 2021. Proclaimed to be the biggest shakeup in divorce law since the Sixties, the Bill seeks – in short – to reduce family conflict and speed up the divorce process by putting an end to needless “blame games”. Currently, one party has to make accusations about the other’s conduct, or otherwise face years of separation before a divorce is granted. Instead, the new laws will allow a spouse or couple to apply for divorce by making a statement of ‘irretrievable breakdown’.
A BUMPY ROAD FOR DIVORCED WOMEN
Divorce is infamously expensive – and with negotiations often focusing on property and immediate assets, pensions are frequently overlooked. Indeed, nearly three quarters of divorcing couples fail to consider their legal right to share pensions.1
With women already facing a gender pay gap and pensions gap, failing to discuss pensions upon divorce can lead to many women losing out on a share of one of the most valuable assets, and therefore risking financial vulnerability in later life.
The numbers speak for themselves: ◗Divorced women’s median pension wealth at retirement is just 25% of that of their male counterparts.2
◗On average, women currently earn 18% less than men.3
◗In 2018, divorced women had a private pension income 42% smaller than the UK average.4
Industry bodies have called for pension-sharing to be the default position in divorce proceedings – however, regardless of whether this suggestion is taken into account, it is clear that women need to take control of the discussions about pensions.
To ensure that all aspects of a settlement are covered, and for guidance and stability, it’s important to take financial advice during divorce proceedings. After the divorce, your financial adviser will work with you to help you plan for a comfortable retirement and later life.
CONTACT ME TODAY
Wherever you are on your financial journey, it is important that you’re getting the right advice. If you have a question about divorce or pensions planning, or would like more information about my services, please contact me today.
1 Chartered Insurance Institute, 2019 1and4 NOW: Pensions, 2020
3 NOW: Pensions, 2019
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