ONE in five (19%) women stopped paying into a pension altogether after getting divorced and a quarter (25%) reduced their savings after getting divorced, according to research unveiled by Phoenix Group, a specialist consolidator of closed life funds.

The research also reveals that two in five divorced women (42%) say they are worse off financially after divorce. Additionally, half of divorced women made no contributions at all to a pension scheme while married but only one in six had rights to a pension through their ex-husband.

“It’s clear that divorced women face an uncertain future in retirement,” said Shellie Wells, spokeswoman for Phoenix Group. “Not only have many given up rights to their husband’s pension provision, they have often stopped paying into their own pension plan, dipped into savings and, at worst, lost contact with any savings they have accrued.”

The statistics were described as “startling”, particularly since, after the former matrimonial home, the pension pot was likely to be the largest capital asset of the marriage.

“It’s vital that women take action now to ensure that their long-term financial security is provided for and that those going through a divorce really understand their family finances and what they are entitled to, preferably seeking expert advice, as our research found that a quarter of couples (26%) opt for a DIY divorce and risk losing out in their divorce settlement,” added Ms Wells.

Data released by the Office for National Statistics were said to underline the findings, showing that single (including divorced) women pensioners were worst off in terms of income. In 2010-2011 single female pensioners had a mean gross monthly income of £1,209, compared with £1,495 for men and £2,643 for couples.

The research also revealed that among divorced women:

  • One in five (19%) women who did have pension provision when married have stopped paying into a pension scheme after getting divorced
  • More than two in five (42%) will be worse off financially following their divorce
  • 38% who had pensions arrangements during their marriage do not know what happened to their pension pot when they divorced
  • While 66% of female divorcees over 40 rely on the State pension in retirement, only 29% rely on their savings and 12% on their investments
  • One in five (20%) have no idea at all about their pension provision since their divorce
  • Two in five (38%) have no idea what settlement they received following their divorce and only six per cent received pensions sharing order or a pension earmarking order

Alex Davies, private client partner at Cripps Harries Hall, said: “One aspect that is often looked at on divorce is the fact that, in line with the Welfare Reform and Pensions Act, which came into force in 2000, a spouse will always be able to have a claim on the pension.

“What sometimes will happen is that spouses will split all the pensions in two or decide to trade off, meaning that one will keep all or most of their pension but may give the other a bit more of the house or other assets to compensate them. Pensions are always taken into account if either party has one.

“When dealing with divorces, one surprising factor is always the high number of people, both men and women, that know very little about their own financial affairs and how to manage them.

“One of the challenges for people going through divorce is how to get to grips with their finances in a way they perhaps haven't had to previously. Divorce can't always give financial security but does often give greater certainty and is an opportunity to gain control in most instances.”

Ms Wells said: “We’ve had a number of issues where people have divorced but, because we have not been alerted at the time, people have had to chase down ex-spouses for signatures before proceeds can be released.

“If the policy is not specified in the divorce order, a divorcee should assume that they have no rights to the policy so, if you’ve taken out a policy jointly or for your children, you need to ensure that ownership is specified.”

She concluded: “I would urge anyone who has divorced to check through their paperwork and ensure that providers of financial products taken out when they were married are aware of the divorce and have the court’s decision, along with relevant paperwork on their records. This will prevent a shock when you come to draw down a policy.”