Personal Finance

Female pensioners living in poverty: How pension shares can help

Over two million pensioners live in poverty in the UK and women tend to be worse off than men in retirement despite generally living longer than them. Senior Associate at Winckworth Sherwood, Jim Richards, shares his expert insight on how pension share orders can prevent this inequality. studies show that roughly 23 percent of UK adults have no retirement savings as of 2020 while only 42 percent save for retirement on a consistent basis. 

It is recommended that savers put aside £600,000 before retiring, which will provide them with roughly £30,000 in retirement income per year.

However, the millennial generation may need far more than this due to increasing life expectancy and with  less than half of the UK currently saving for retirement consistently it is a worrying situation. 

Additionally, the gender pensions gap has made it harder for women to retire comfortably when compared to their male counterparts even if they are part of the 42 percent. 

Women’s retirement savings will also be far worse off than their partners in the event of a relationship breakdown as they tend to take on more of the unpaid work around the home meaning they may not be able to financially contribute to a pension whilst married. 

But what can women do to avoid this perilous fate in retirement? Mr Richards believes the key lies in pension share orders in the case of a relationship breakdown. 

Pension share orders take the money from a single retirement fund and create two separate accounts for both parties.

In 2000, the power to create a pension sharing order on divorce cases was implemented but only 12 percent of divorce settlements since then have used this. 


Mr Richards commented: “As a result, the position that divorced women find themselves in remains parlous.”

He added that while the reasoning for this may differ between each divorcing party, he suggested that in general terms women are more likely to prioritise a home over a pension provision. 

The opposite is true for men in divorce situations and Mr Richards noted that this would see women facing similar financial struggles as those in the era before pension sharing orders. 

Mr Richards said: “This is simply not an issue which you can hide from.  Like it or not, this will come knocking at your door.  

“Life expectancies broadly continue to rise and therefore the time that you will experience retirement income is likely to be longer than previously envisaged.  

“Additionally, women tend to live longer than men statistically speaking.”

“For these reasons, it is imperative that if pensions are a significant resource within a divorce settlement, time is taken to consider how this should be shared fairly.”

Mr Richards explained that in this situation, fairness refers to providing equal income in retirement and reflecting the different contributions made by the parties during their marriage. 

These contributions should also include unpaid care work, such as raising children which disables one of the parties from contributing financially. 

Mr Richards advised that when doing this, expert advice should be taken from the earliest stage possible from a team of lawyers, actuaries and financial advisors. 

This will likely open a broader range of options to better suit one’s goals and retirement ideals. 

Mr Richards concluded: “Failing to do this can result in the level of poverty which has been described at length for many years now and that can be avoided if the circumstances allow it.”


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