Pensions gap for women

The Workplace Pension Scheme NEST has produced a report looking at how employers and employees can help fill in the gender pay gap.

In 2012, the government brought in a phased automatic pension enrolment system for all eligible workers.  Both the employer and the employee must pay into a scheme.  This revolutionised the pension landscape.  It ensured that more women than ever are saving into a workplace pension, however, women still end up with less pension income than men.

There are significant challenges for women when saving for retirement and these include the fact that there are a greater number of women working in low paid and part time jobs.  They therefore have much less to put into their pension and their employer contributes less as a result.  Women also live longer than men and will require their pension savings to last longer.

If you are getting divorced, the current figures show that only 14% of divorce settlements include a share of a pension and this can leave women more vulnerable to financial hardship in later life. At IBB we will always advise our clients, regardless of gender, on the need to consider pensions within a divorce settlement.

On divorce, the Court can deal with pensions in three ways:

1. Pension Sharing Order (“PSO”),
2. Pension Attachment Orders (“PAO”)
3. Offsetting

PSO are the most common method of sharing pensions on divorce. PSO’s allow the Court to direct the pension advisor to divide the rights under a pension scheme so that each spouse would have their own independent rights under that scheme or two separate schemes.

PAO enable the Court to direct the pension provider to pay regular payments, a lump sum or lump sum death benefit at the time these benefits become due to the other spouse. The payment can be for periodical payments, secured periodical payments or lump sums. There are however limitations to PAO’s and that is why they are infrequently used.

The Court can also consider offsetting which would allow one party to retain their pension fund in favour of the other spouse retaining a greater share of other matrimonial assets. However, again this is fraught with difficulty when parties try to calculate the level themselves because they may be significantly disadvantaged in the retention of one asset over the other.

Therefore, if you are separating from a spouse, you should consider the pension pot that is available as you may entitled to a share of it.  Pensions are extremely complex assets and at IBB we would always encourage separating couples to consider getting expert input from a family lawyer and also a pension specialist.

Speak to our family law experts today

IBB Law’s family law practice can provide expert advice on all family law issues. To contact the family law team please email familylaw@ibblaw.co.uk or call 03456 381381.