I'm a financial expert - divorced women are missing out on millions thanks to 1 thing

Bhavna Radia, a former family solicitor and founder of the Divorce Lounge, said many women she advised were often scared to ask their ex about their pension. She said: “Women are worried it will make them look greedy.

Pensions can be worth hundreds of thousands of pounds and as much as £4bn a year could be going unclaimed during divorce settlements, according to experts.

One family lawyer told the Daily Express she had clients who had worked in low and middle-income paying jobs in the public sector who had amassed pensions worth over £1 million. In 2000, the law was changed to allow pensions to be included as part of a divorce settlement, but less than a third of couples are opting to do so.

Another family law solicitor also said she had sat down with clients and pleaded with them to consider looking at their spouse’s pension.

When they get divorced, experts say women are often worried it will make them look greedy and also believe, wrongly, that by claiming a share of their ex's pension, they will remain tied to them for life.

In 2022, 120,000 couples split in England, Wales, Northern Ireland and Scotland. The Institute and Faculty of Actuaries (IFoA) said this was increasing among those aged 65 and above. According to the Office for National Statistics 42% of marriages end in divorce.

Scottish Widows has estimated women who divorced later in their working life could miss out by £77,000 in their pension pot at retirement, this works at around £4bn a year in pension cash which is not being considered in a divorce settlement.

One local government pension scheme believes that the gender pension gap could be narrowed if more pension cash was included when couples divorced.

Jeremy Hughes, senior pensions secretary at the Local Government Association and deputy board secretary of the Local Government Pension Scheme Advisory Board, said if pension splitting could even help close the gender pensions gap.

The £4bn figure does not take into account property or other large assets, which can be offset against a pension, but Bhavna Radia, a former family solicitor and founder of the Divorce Lounge, said the women she advised were often scared to ask their ex about their pension. She said: “Women are worried it will make them look greedy.”

A family law solicitor who didn’t want to be named said: “I have sat down with clients and pleaded with them to consider looking at their spouse’s pension.”

“I managed to persuade one woman who was going to settle for the family home - which was worth around £200,000, to consider a pensions splitting order.

“So we managed to go for a pension splitting order with her husband, a mid level civil servant, who had saved over £1m in his pension during their 20 year plus marriage.”

A study by the University of Bristol and the Nuffield Foundation also found more than a third of divorcees did not know how much their pension savings, or their partner’s pension savings were worth.

Lucy Chahil, a financial planner, said the cost of the reports compiled by actuaries before the pension could be split often put women off. “But in the long run having a properly-funded pension will save them even more.”

“We really insist that women consider the long-term cost of not taking the pension into account when they are looking at family assets.”

Chahil urged women who were divorcing to use the websites Advice Now and Resolution. “There are loads of resources for anyone who is looking at their finances and considering or about to divorce.”

Karen Dovaston, a solicitor and chair of the Law Society’s family law committee, said: “If your ex has been employed in a civil service type job then they may have a government backed or minimum guaranteed pension plan, such as a final salary scheme. “These are worth a lot more.”

“Also consider where you live or lived, for example Southend in the 1970s and 1980s was a big banking town so their ex may have amassed a large pension during those years.”

“It’s regional too, if you work near Salisbury, then it may be military pensions or in Dagenham the old Ford pensions scheme, and so on.”

There are different ways of splitting a pension, if you are getting divorced:

Offsetting

With offsetting you exchange the value of a pension in exchange for other assets or cash.

Attachment or earmarking

You gain the right to part of an ex-partners pension, but you need to wait until they retire and if you remarry or your ex-partner dies, you may lose your right to the pension

Pension sharing

This is when pension benefits are split at the time of the divorce. The money can remain with the same company or transferred to a new pension. When you split the pension, you may also need to pay some charges if you transfer money out of the pension into another. The value of your pension is called the ‘cash equivalent transfer value’ or the amount you would get if you took out your pension and moved it to another pension scheme.

The state pension and divorce

If you have an additional state pension, then a court can issue a pension sharing order which means this may be split as part of any financial settlement but you will need to have been born before 6 April 1951 if you are a man, or 1953 if you are a woman.

If you are going through a divorce free advice and a helpline are available via the Government websites Moneyhelper and the Money and Pensions Service (MAPS)