Sobering new research from Legal & General suggests that women's household incomes fall by a third (almost twice as much as men) in the year following their divorce.
Why is this? Two of the potential reasons posited by Legal & General include the gender pay gap (i.e. that women are typically paid less than men) and that although our traditional gender roles of "homemaker" vs "breadwinner" are becoming increasingly blurred, men are statistically more likely to have been the primary breadwinner (74% men vs 18% women) according to their research.
However these two reasons only show part of the bigger picture. The UK is renowned throughout the world as being one of the fairest divorce jurisdictions, particularly to financially weaker parties in the marriage. Under UK family case law, marriage is viewed as a partnership where contributions are assessed in the round and equal importance is placed on the role of homemaker or caregiver as is placed on the breadwinner. It follows then that there must be other factors at play here.
Which leads us to our third and most interesting reason for this disparity in incomes between men and women on divorce; pensions.
The research reveals that women are significantly more likely to sign over their rights to this key financial asset. With negotiations or settlements entered into without advice focusing on the family home. However, pensions can often be one of the most valuable assets in the matrimonial pot and should not be overlooked.
This is particularly important for women given that research from the ONS reveals that women tend to have less personal pension wealth than men, yet they live longer on average.
Whatever your gender, it is crucial that you obtain expert advice regarding pension assets to ensure that appropriate disclosure has been exchanged to ascertain how much the pension assets are worth and to avoid negotiating in the dark. Once that has been done, tailored advice can be given as to the appropriate division of these pensions to ensure that these assets are shared fairly and to enable both parties to have an appropriate income in later life (where the pension pot allows).
This can help people to feel empowered about their finances and avoid worrying unduly about the impact of divorce on their retirement.
Link to related article: https://www.legalandgeneralgroup.com/media-centre/press-releases/the-divorce-gap-women-see-incomes-fall-by-33-following-divorce-compared-to-just-18-for-men/#:~:text=4%20Jan%202021-,The%20Divorce%20Gap%20%E2%80%93%20women%20see%20incomes%20fall%20by%2033%25%20following,to%20just%2018%25%20for%20men&text=There%20are%20many%20reasons%20driving,%25%20men%20vs.%2018%25)