The gender pay gap is currently 7.7%. The gender pension gap measuring the amount of money in a pension fund at age 65 is £100,000. Leading to an average retirement income gap of 39% or £7,000 per year between men and women.
The Equal Pay Act is 48 years old, yet income parity still doesn’t exists in the UK.
There is no quick fix to this gap, but a better understanding of pension options and how to fund them through a working career is key. Earnings gaps and, hence, reduced pension contributions commonly impact women more severely.
The financial impact of Divorce can often affect women significantly more. The latest research shows that around 60% of women did not discuss a partner’s pension as part of their divorce, leading to an average loss of £77,000.
Women often choose to ignore claims against their spouse’s pension or ‘offset’ the value of pensions to retain the family home. Of course, sometimes this can be a sensible approach, but it is essential to be aware of the pension share they are giving up. In fact, more people are concerned about losing a pet in any settlement (13%) than they are about sharing a pension (9%).
Some couples are unaware that the courts have the power to share pensions between them or are concerned that it is not possible to achieve a clean break after the divorce. Yet sharing a pension is often straightforward and provides for a clean break between them so that each partner has the freedom to do what they want with their share of the pension independently of the other.
The cost of seeking expert financial advice in this area can put some couples off but often the cost is outweighed by the long-term benefit. The Courts will not simply approve an agreement that has been reached between a couple without being satisfied that it is fair to each party both now and in the future.
For many years The Financial Planning Group have worked alongside solicitors, mediators and in a collaborative process with all parties to make sure everyone understands the implication of pensions in any financial settlement now and in the future. We use specialist software to analyse financial decisions and the implications of these throughout a client’s life.
As Chartered Financial Planners with over 35 years of experience, we offer an initial consultation at our expense to understand your situation better before any fees are incurred. If you are facing a relationship breakdown or wish to discuss pensions more generally, please contact us to arrange a meeting in our office in central Teddington by calling Tim Norris on 020 8614 4780 or emailing him at Tim.Norris@fpgonline.co.uk
