By Vicki Rawlins, Family Law associate at Irwin Mitchell
Research has been published by Legal & General regarding the financial implications of divorce on both men and women. The results make for interesting reading; the headline being that on average, women will experience their incomes drop by 33% following divorce compared to men, whose incomes on average fell by 18%.
The research suggests that there are multiple reasons for this difference. These include the following:
- That women remain typically lower paid than men, with the average divorcing man being four times more likely to be earning more than the women;
- That women are more likely to waive their rights to seeking a pension sharing order from their husband’s pension (28% women compared to 19% of men).
Given that men generally have better pension prospects than women to begin with, this is eye-opening information. For men under state pension age, their median active pension wealth is likely to be £25,300 compared to women under state pension age of £20,000. The gap increases at state pension age and above: here a man’s median pension wealth is £223,933 versus £112,967.00 for women.
This raises the question: why are so many women foregoing legitimate claims against their spouses’ pensions? Pensions remain generally shrouded in some level of mystery to the average person in any event; when you add that it remains commonplace for one spouse to manage a couple’s financial affairs, this may offer some explanation.
Other points that arise from the research are as follows:
- Women are more likely to face financial struggle post-divorce (31% compared to 21% of men);
- Women are more likely to worry about the effect of their divorce on retirement (16% compared to 10% for men);
- Men are more likely to have felt that their divorce settlement was fair (54% compared to 49% for women);
- One in four divorces takes place after the parties reach 50 years of age.
One of the more shocking figures I noted is that only 3% of divorcing people sought financial advice as part of their divorce process. The benefits of this to clients can be invaluable and should generally be undertaken as an integral part of the divorce and financial process. The prospects of resolving matters with the benefit of a legal advisor plus a financial advisor are heightened and should provide additional value to the client.
The Divorce Gap – women see incomes fall by 33% following divorce, compared to just 18% for men