Women losing out on fair settlements in divorce

Around 100,000 couples get divorced every year in England and Wales, requiring assets to be divided and financial arrangements to be made.

Divorcing couples often try to work out money matters themselves rather than seek advice — but this is leaving women worse off, according to a study led by the University of Bristol and funded by the Nuffield Foundation.

Modest assets

Most couples have relatively modest amounts of money and possessions to divide up and many try to save money by sorting out arrangements such as housing, pensions and ongoing maintenance without legal advice.

Including home and pensions, and taking into account any debts, divorcing couples have total assets of £135,000 on average.

Only two in five divorcees made use of lawyers as a source of information, advice or support during the divorce process. Many cited fear of the cost — but when legal advice was used, nearly a quarter of divorcees said it cost less than £1,000.

One in four end up with nothing

The Fair Shares report reveals the considerable financial vulnerability of women after divorce, said lead author Emma Hitchings, Professor of Family Law at the University of Bristol.

"Although legal processes are largely fair, these are not being used, especially by those with least means but most need," Professor Hitchings pointed out.

The survey of over 2,400 divorcees found that almost a fifth of couples had no assets to divide and of those who did, only three in ten reported receiving around half of the net asset pool. Given the relatively modest average asset pool, a quarter of divorcees ended up with nothing or just debts.

Pension sharing

Pensions were found to be an especially poorly understood and underutilised asset. Only one in 10 divorcees with a pension yet to be drawn had made an agreement for pension sharing.

At least 60% of divorced women didn’t even discuss pension assets during divorce, according to separate research by Scottish Widows. Yet only 17% of women who didn’t discuss retirement savings during divorce said those assets were immaterial.

This lack of communication can cost women £77,000 on average in retirement, the Women and Retirement report found.

More than a third of divorcees did not know the value of their own pension pot, let alone their spouse’s, Professor Hitchings said.

"Without all assets, particularly pensions, being considered on divorce, the future financial security of many women, who generally have smaller pension pots than men, is being put at risk."