As growing research continues to shine a light on financial inequality between men and women, one issue remains particularly stark yet frequently overlooked during divorce – the pension gap.
Despite pensions often being one of the largest assets accumulated during a marriage, second only to property, they are routinely forgotten, misunderstood, or undervalued in financial settlements. The consequences for women can be severe, particularly as the impact may only become clear decades later at retirement.
A 61% Pension Gap
Recent data from NOW Pensions and the Pension Policy Institute (PPI) highlights the scale of the problem. Divorced women in the UK hold, on average, 61% less pension wealth than divorced men.
- Median pension wealth for divorced women: £32,640
- Median pension wealth for divorced men: £85,800
This means women typically have £53,160 less in pension savings, holding just 39% of the pension wealth of their former husbands.
These figures reflect what many family practitioners regularly see, especially in cases involving couples who divorce later in life. Differences in working patterns, responsibilities and earnings over the course of a marriage often result in a substantial disparity by the time of separation.
Why the Gap Exists
Several structural and social factors drive this imbalance:
- The Gender Pay Gap
Women continue to earn less on average, with the latest ONS data showing a 6.9% gender pay gap based on median hourly earnings. Lower earnings translate into smaller pension contributions over many years. - Career Breaks and Part‑Time Work
Women are significantly more likely to take time out or reduce working hour for childcare or other caring responsibilities. These career interruptions reduce contributions from both the individual and the employer, creating long-term pension shortfalls. Research also shows that 30% of divorced women work part‑time, compared with 10% of divorced men. - The Complexity of Pensions
Pensions differ significantly from other matrimonial assets, such as savings or property. They represent deferred income rather than immediately accessible cash, which means their value is tied to long‑term financial planning rather than present liquidity. Pension valuations also rely on Cash Equivalent Transfer Values (CETVs), but these do not always reflect the true value of certain schemes, particularly defined benefit pensions, where the benefits are based on salary and service rather than contributions.
In addition, the future value of a pension can be influenced by various factors, including investment performance, inflation and the individual scheme’s rules. This combination of deferred access, valuation challenges and long‑term uncertainty makes pensions more complex to assess and can result in them being pushed aside in the financial negotiation process. - Overlooking Pensions in Divorce Settlements
Alarmingly, the 2026 Gender Pension Gap Report found that 71% of divorce settlements fail to address pension assets, with many couples prioritising immediate housing needs instead. Although securing a home is undoubtedly important, overlooking pensions during divorce can have significant long‑term consequences. Women in particular face a heightened risk of financial insecurity in retirement when pensions are not properly considered or divided fairly.
The Consequences in Later Life
Women typically live longer than men, meaning their pension savings must last longer—around 17 years compared with approximately 13 years for men. Despite this, the average annual pension income for a divorced woman is just £13,893, which is only marginally above the UK’s minimum retirement living standard of £13,400. In contrast, divorced men receive more than £18,500 a year on average. This gap in retirement income is not only substantial but often life‑changing, leaving many women in financially vulnerable positions in later life.
How Can Pensions Be Divided on Divorce?
There are several ways to address pensions during financial negotiations:
- Pension Sharing Orders – The most common method. A percentage of one spouse’s pension is transferred to the other, giving a clean break and independent control of pension provision.
- Pension Attachment (Earmarking) Orders – Less common. A portion of future pension income is paid to the former spouse when the pension comes into payment.
- Offsetting – One spouse keeps their pension, while the other receives a larger share of other assets (often the family home). This can be risky if pension values have not been accurately assessed.
Because of the complexity involved, the best practice is to involve a pension actuary early, particularly where there is a clear disparity.
Closing the Gap
Pensions are too important to overlook. With greater awareness, more accurate valuations and specialist advice, divorcing women can secure fairer outcomes and better financial stability in later life.
If you would like advice on pensions in divorce or need assistance understanding your options, please contact Catherine Lowther at Catherine.Lowther@swinburnemaddison.co.uk or call our Family Team on 0191 384 2441.
