The eighth annual Scottish Widows Women and Pensions report for 2012 has just been published. This, perhaps unsurprisingly, will not be top of the list of things to read and worry about for many women as we carry out that fine balancing act of juggling a job with family.
A YouGov poll in March 2012 interviewed 5,200 adults of which only one in five women confessed to having made what they perceived to be adequate financial provision for their retirement. Health care continues to improve, and we all live longer, and the welfare state continues to retreat. A woman aged 65 in 2035 will now be expected to live on average until the age of 90. The state retirement age will increase to 68 for women by 2046 and possibly earlier, and for younger women the state retirement age will probably increase further.
A Parliamentary Committee was established almost a decade ago as a consequence of which this year will see the very first employees automatically enrolled into a company pension scheme. Scottish Widows report that for most women, the key to having a pension is access through an employer. The Government Family Resources Survey shows that if a pension is offered through work, there is very little difference between the number of men and women who will contribute.
But this is all very new and assumes that we will all be juggling jobs and family on a full time basis, and won't work part time, or have career breaks and will earn the same as our male counterparts. Many families continue to have a high level of interdependence. Whilst shared parenting arrangements are increasingly common, many men aren't offered enough flexibility at work, or there is a social stigma attached to part time work for them, and the job of caring for the very young, and the older generation often falls to a part time working female population.
Pre Nuptial and Post Nuptial Agreements entered into either before or during marriage are currently in vogue, and there has been a move to support their enforceability with a Law Commission report. Whilst these are plainly often a good idea, it can be difficult discussing money before you marry, and even more so after marriage without ringing alarm bells about unspoken feelings of things maybe not working out.
For those women facing divorce or separation we often worry more about the daily practicalities of where we are going to live and if we can afford childcare. One in three marriages ends in divorce by the 15th anniversary but of these, only 15% of those women surveyed said that pensions were discussed as part of their divorce settlement.
The issue of pensions on divorce can often be a difficult and emotive issue. Many men will understandably consider a pension to be theirs as it relates to their employment, and many lawyers don't understand the complexities of the various benefits that can be wrapped up into the myriad of schemes that there are which determine their true value. At the end of the day, most people divorcing whether men or women just want what's fair.
There are three main ways of dealing with pensions on divorce:
The pension pot is shared between you. It doesn't necessarily have to be an equal share. This is an Order made directing the trustees of a pension to separate the fund out into two. A wife then holds a pension fund in her own right, which is not linked to the husband's death, or retirement age, and therefore gives financial independence.
One of you gets more of the capital assets such as savings and property, and one of you retains more pension.
Part of the lump sum payable, and/or income paid from the pension, is paid instead to the wife. The husband chooses the retirement date, and there is less financial independence achieved.
What is therefore clear, is that many of us who want to realise the expectation of retiring at 60, and not being financially dependent upon our children, may need to think about pension investment. For those of us facing divorce or separation, whether male or female, most importantly, it is crucial to obtain legal advice from a lawyer who has expertise in dealing with financial matters on divorce.
For more information on all aspects of Family Law contact one of the team on 0113 201 4900 or email firstname.lastname@example.org for confidential expert advice.Back to Blog