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.
According to pension experts 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.
A family law solicitor said she had sat down with clients and pleaded with them to consider looking at their spouse’s pension.
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.
The IFoA estimated 60 per cent of divorces did not include the pension, meaning around £1.8bn a year was not being split, Scottish Widows has estimated women who divorced later in their working life could miss out by £77,000 in their pension pot at retirement, which means over £4bn may be going unclaimed.
A pensions is often the second most valuable asset after a home, and can be worth hundreds of thosands, especially if the former spouse was employed in the public sector and has a gold-plated final salary pension sheme.
Women who are divorcing are being urged to use the websites Advice Now and Resolution which have resources and information on splitting a pension.
The average pension pot saved by a man, based on these calculations would be around £167,000 while a woman’s would be worth 38 per cent lower at around £104,000.
Assuming the assets would be combined and split evenly on divorce would mean half of the difference is not included if pensions are ignored on divorce which would be around £31,500.
A spokesperson for the IFoA Gender Gap Pensions Gap Working Party said: “Our estimated figure could be very different in practice as pension pots may not be split 50/50, for example due to approximate allowance when dividing other assets.”
“If someone has been divorced previously their pension may already be reduced. We have assumed no prior entitlement or division of an individual’s accrued pension for our calculations.”
How to split your pension when you divorce
There are several ways you can divide up a pension, legally. The options include:
Offsetting your pension
This is when you swap the value of your ex’s pension in exchange for other assets or cash.
Attachment or earmarking a pension
This is when you share your ex’s pension but it remains invested until your ex retires.
Pension sharing
The pension funs is split into two and you can either keep that pension fund with the same provider as your ex, or get a transfer value and set up another pension elsewhere. You may also need to pay a fee if you move it. This amount is know as the ‘cash equivalent transfer value’ or the amount you would get if you took out your pension and moved it to another pension scheme.
Splitting your state pension?
You can only ‘split’ your state pension if you have an additional state pension. This only applies to couples if you were born before 6 April 1951 if you are a man, or 1953 if you are a woman.
For further free advice on divorce and pensions you can go to the Government websites Moneyhelper or the Money and Pensions Service (MAPS)