New research has revealed that divorcees who retire in 2017 could be up to 16 per cent worse off than their married counterparts.
The study, carried out by Research Plus on behalf of insurance provider the Prudential, found that divorced retirees could expect their annual pension income to be up to £3,000 less than an individual who had never divorced.
The insurer’s annual study – which for the past decade has tracked the finances and future plans of people planning to retire in the year ahead – reveals that divorcees retiring in 2017 expect to receive an average annual retirement income of £16,300 compared with an average of £19,400 for those who have never gone through a marriage break-up.
The study also highlighted the fact that around one in three people who have been divorced expect to retire with debts (32 per cent), compared with just one in five (21 per cent) of those who have not been divorced.
Divorcees are also more likely to receive pensions below the annual minimum income standard for single retirees set by the Joseph Rowntree Foundation (JRF). Around one in five who have been divorced (21 per cent) expect to have incomes lower than the JRF’s benchmark of £186.76 a week, or £9,712 a year, compared with 13 per cent of those who have never been divorced.
Clare Moffat, a pensions’ specialist at Prudential, said: “The financial impact of divorce can be devastating both in the short and longer-term, lasting well into retirement as divorcees experience expected retirement incomes of as much as 16 per cent lower than those who’ve never divorced. Deciding on living costs and childcare at the point of divorce is difficult enough, but a pension fund is likely to be one of the most complicated assets a couple will have to split in the event of a divorce.”
“The recent regulatory changes and enhanced flexibility of pensions have led to more divorcing wives opting to seek a share of their husband’s pension (or vice versa) rather than, as was previously more common, accepting a larger share of the other assets instead.
“This issue will affect a growing number of people due to an increase in the number of people who choose to divorce later in life. In such circumstances, it is important to seek legal advice to ensure an equitable settlement of all assets including pension investments.”