New research highlights the opportunity to combat wealth inequality through pension sharing on divorce

The unequal distribution of pension wealth puts women at greater risk of poverty in later life, especially after a relationship ends

Important work in relation to pensions on divorce continues in the wake of the publication of the Pensions Advisory Group’s main report in 2019, steered by Hilary Woodward and on which Jo Miles served as an academic.

Recent research – conducted by another PAG member Professor Debora Price with Dr Jennifer Buckley at the University of Manchester and supported by the Pensions Policy Institute and MICRA – analysed data from the Wealth and Assets Survey, between April 2016 and March 2018, with records for 28,969 individuals, including 10,408 couples, and highlighted stark inequalities in pension wealth.

That research finds that pension wealth is very unequally distributed, with men having substantially more private pension wealth than women, especially if they are married. In about half of couples with pensions, one partner has 90 per cent of the pension wealth. Fewer than 15 per cent of couples have pensions that are approximately equal. These disparities vary little across the income and wealth distributions.

This unequal distribution continues after a relationship ends. For example, divorced women, not cohabiting, in their late 60s have less than 30% of the pension of equivalent men. People in second marriages have lower median pension wealth than those in their first, and the gender gap remains prevalent.

For households in the top 40 per cent by household income, median pension wealth exceeds median property wealth. This is especially likely to be the case for those living outside London and the South-East of England. any trade-offs between house and pension in divorce may not always be balanced as pension wealth can exceed property wealth for more pension-wealthy couples, especially outside London.

There remains considerable opportunity for pension sharing when a relationship comes to an end, which could have a significant impact on women’s finances in later life. To support people at this emotional time, the Pensions Advisory Group have helped produce an informative video animation on pensions and divorce, which explains more about how to get a fair final settlement for all parties.

For free and clear information about what the law says on pension sharing and how to come to an agreement, take a look at the Survival Guide on Pensions on Divorce, prepared by @LfL_Advicenow in consultation with the PAG.

Read the full research report, available now.

The PAG’s major report on Pensions on Divorce was published 2019. You can find out more about the Pension Advisory Group and read the report and supplementary material on the Pension Advisory Group project website.