Divorcees missing out £77,000 each after ignoring ex’s pension

An easy pension mistake could see YOU miss out on tens of thousands of pounds in retirement. Divorcees are missing out on tens of thousands of pounds in retirement if they ignore their ex’s pension, it has been warned by experts.

Sarah Green, a family lawyer at Michelmores, warns: “Pensions can be one of the most valuable assets, sometimes more valuable than the family home.” When you divorce, private pensions are part of the financial settlement.

Lara Davies, head of legal at OLS Solicitors, says: “It’s important to get a clear picture of all pension entitlements. This can be done by requesting a so-called cash equivalent transfer value for each pension.” There are three main options for dealing with pensions in divorce: Splitting, offsetting or earmarking.

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Scottish Widows estimates that women are missing out on an average of £77,000 by ignoring pensions in divorce. Clare Moffat, pensions expert at Royal London, says: “Pension sharing is the fairest way to split a pension as then both parties own a part of the pension. But it’s seen as more costly and can take longer.” Clare says: “In divorce cases where there are younger children, often one parent will want to keep the house and the other parent will want the pension.

"It might be possible to downsize in retirement but for most people it still won’t provide the level of retirement income needed.” Clare says: “Pension attachment, or earmarking, orders are rarely used now.

“The person who technically owns the pension can choose when to take it, what to invest it in and if they die before they take the pension, the ex-spouse could get nothing.” Jackie Leiper, managing director at Scottish Widows, says: “Divorce can be an extremely stressful time, and women may be focused on the immediate situation like staying in the family home or looking for somewhere else to live and what will happen with the children.

“It can be easy for pensions to sink down to the bottom of the priorities. Some may prioritise keeping the family home, but this could be at the expense of a fair pension share.”