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Economic abuse and pensions

Retirement can be a time of reduced household income and re-evaluating expenses. Women, in particular, face a higher risk of pension poverty than men. 

If you are experiencing abuse, a lack of retirement savings can make you dependent on the abuser. An abuser may also restrict, exploit, or sabotage the money you receive in your pension.

If a current or former partner has interfered with your pension or economic resources in some way to limit your choices, this information is for you.

Economic abuse in older adults

Domestic abuse does not always involve the use of physical violence. Some abusers dictate their partner’s choices and control their everyday actions, becoming violent or threatening to become violent if their demands are refused. This pattern of behaviour is a form of abuse known as coercive control. It is designed to intimidate, isolate and control the victim.1 

Research has found that the control over economic resources within relationships does not tend to change in older age or after retirement. The dynamic usually stays the same unless the couple separates or one partner becomes ill.2

Older women may be particularly vulnerable to economic hardship. A woman who is 65 can expect to live 2.6 years longer than a man of the same age. Since many women marry men who are older than them, they may become carers and then widows, and later have to manage bills or finances they have never faced before.2 

Older people can also face additional barriers to leaving an abuser.3 For example, you may have been experiencing abuse for many years, have health conditions that limit your options, or rely on your abuser for money or your home.

If the person who takes care of you economically controls or abuses you, it may feel like there is no way out. 

“I was so proud of myself. I was earning and putting away for my twilight years…Yet, as he controlled the payments, he told me it had to stop paying into it! We argued about it and he said that he would continue with the payments. I met up with a friend this year from school and he was talking about early retirement and I thought I had to take a look at my pension. I was heartbroken, he had not done what he’d said. My pension is a quarter of what it should be.”

Pension inequality

“The average pension pot for a 65-year-old woman is one-fifth of a man’s, thanks, in part, to domestic and caring responsibilities.” (4)

Women’s pensions can be significantly smaller due to a variety of factors, including: 

  • having a low-paid job 
  • not reaching the auto-enrolment threshold, which starts with a salary of £10k 
  • taking time out for maternity leave and childcare 
  • taking time out to care for aging parents or vulnerable family members  

Your pension age will depend on the year you were born. Since 2010, the state pension ages have been changing. It rose to 65 for women between 2010 and 2018, and will rise again to 66, 67 and 68 for both men and women. Some women planned on being able to draw their pension earlier, but now must wait until they are 65. You can check your state pension age on the Money Helper website.

There are many ways an abuser could compromise your pension or economic safety in later life, including: 

  • having your pension paid into a joint account or an account they control
  • coercing you into withdrawing the whole pension or large portions of it at once (see ‘pension freedoms’ below) 
  • using your pension on other expenses, such as renovating the house or paying for a wedding, while keeping their pension for themselves
  • exploiting your dependency on them, if they have a higher pension
  • keeping information about finances and pensions a secret 

“With not working and being the main caregiver to my twins, I have missed out on seven years of employment and pension growth. I have now around £10K left from my life savings which are all going on my legal fees for my divorce. I will go into debt before my court case but I will keep fighting on.” 

State pensions

There are two types of state pension. The one you will receive will depend on your age. People can claim a basic state pension if they are:

  • a woman born before 6 April 1953
  • a man born before 6 April 1951

The most you can currently get per week on a basic state pension is £134.25.

Basic state pensions increase each year by whichever is the highest of these factors:

  • the percentage growth in wages in Great Britain
  • the percentage growth in prices in the UK
  • 2.5%

People can claim a new state pension if they have 10 years of NI contributions and are:

  • a woman born on or after 6 April 1953
  • a man born on or after 6 April 1951

The full new state pension is worth up to £175.20 per week. However, the actual amount you receive depends on your NI contributions. You can check how much you are likely to receive on the government website

To claim a new state pension, at least one or more of the following must have applied to you for at least 10 years:

If you’re widowed, you could substitute your late partner’s NI record for your own, qualifying for 100% of the basic state pension if they had a full record of contributions. 

If you are divorced when you reach state pension age, you can substitute your ex-partner’s NI record for your own, up to the point of your divorce. For people who divorced later in life, doing this could mean you qualify for a full basic state pension.

‘Married woman’s stamp’

Until April 1977, married women could choose to pay less in National Insurance contributions, usually at a rate of 5.85%. If you opted in to this scheme before the cut off date, you might still be paying this lower rate today.

This scheme is sometimes called the ‘married woman’s stamp’ or ‘small stamp’. If you have or are still paying the ‘married woman’s stamp’ rate, your pension will be reduced and you won’t be entitled to certain benefits.

You can use the government website to find out what benefits you still have access to. You can also download forms on their website to stop paying the reduced rate or let the government know that your circumstances have changed (such as in the case of divorce or the death of a spouse).

Types of private pensions

In addition to your state pension, there are two main types of private pensions:

  • Defined contribution — based on how much you and your employer pay in.
  • Defined benefit — based on your salary and how long you have worked for your employer.

Pension freedoms 

In 2015, the government introduced pension freedoms, which allows people over the age of 55 to withdraw their ‘defined contribution’ pensions as one lump sum or in ad hoc payments.  

While this could allow you to spend the pension money on whatever you need to, it also could put your financial security in later life at risk. 

An abuser could coerce you into withdrawing your whole pension pot or a portion of it under the pension freedoms rules. This could leave you with little money of your own in retirement, and could make you feel economically dependent on them. 

When you, or anyone in your household, withdraws all or part of a pension pot, this is classed as income. The amount you receive in means-tested benefits, such as tax credits, housing benefit or Universal Credit, may be affected if your income increases, or you may have to repay overpayments at the end of the financial year.

Divorce

Almost three quarters of divorcing couples do not consider their legal right to share pensions.4 Some people do not wish to complicate the divorce proceedings, whereas others may not know they have a right to those resources.

If you separate and get a divorce, your pensions could be split in different ways. Pension sharing or splitting can be helpful if your pension is much smaller than your ex-partner’s.

Some people worry that including the pension in the divorce proceedings will mean having prolonged contact with an abuser. This is not the case. You do not have to have contact with your ex-partner for their pension to be shared. 

Your accounts will not be linked. The pension company and your divorce lawyer can handle all of the communication for you. 

“I felt in a position to start financially planning again — beyond just living month to month. I have sorted my pension out, with the help of a financial adviser.”

Pension rules and divorce laws are complex, and can vary widely depending on your individual situation. It is recommended that you speak to a financial advisor before making any decisions about your pension after divorce. 

If you feel safe to do so, telling them that you have experienced economic abuse can help. They may be able to suggest ways of de-linking your pension or other finances from those of the abuser. They can also suggest ways to keep new banking and pension information safe and secure to help prevent further abuse. 

Trying to prevent you from accessing a pension can be the last opportunity an abuser sees for control. They may send aggressive emails to the professionals negotiating your pension agreement, or delay paying necessary fees. 

The process may take time, but you should not have to be in contact with your abuser. 

Advice Now also has a guide on pensions on divorce available for download online. The print booklet comes with a cost but the PDF is freely available.

Ways to manage pensions after divorce include:

Pension sharing order

A pension sharing order means you get a percentage of one or more of your ex-partner’s pensions. 

It can be transferred into a pension in your name or you can join your ex-partner’s pension scheme. The pension scheme will have particular rules about which method they allow. 

A pension sharing order does not mean you will have to maintain any contact with your ex-partner.

If you do not already have your own pension, you will need to set one up in order for the percentage share to be transferred to you.

In England, Wales, and Northern Ireland, there is also an option called ‘deferred pension sharing’, which you can use if your ex-partner is already retired but you are still too young to receive a pension. 

Pensions offsetting 

Pension offsetting means the value of the pension is offset against other assets.

For example, you could keep the family home, or a larger share of it, in return for your ex-partner keeping all of their pension. Without knowing the value of your ex-partner’s pension, however, this can be a very unequal split. 

It is a much more common choice, as people believe it makes it easier to have a ‘clean break’, or they may not feel entitled to a portion of their ex-partner’s pension (despite their legal entitlement). 

Deferred lump sum 

A deferred lump sum means you will get a single lump sum payment from your ex-partner’s pension when they retire, if they are not already retired. This option is not available in Scotland. 

Pensions attachment order 

With a pensions attachment order, you can receive some of your ex-partner’s pension income, a lump sum or both, when they start taking their pension. This is called ‘pensions earmarking’ in Scotland. 

An abuser may maintain more control in this scenario, because they can decide when to start drawing their pension.

Individual agreement 

You and your ex-partner could come to an agreement that does not involve sharing pensions, but it will need to be legally documented. 

It is crucial that lawyers understand that you may have been coerced into making an agreement if you are experiencing economic abuse. You should seek legal and financial advice before taking this option.

Other rules 

If you or your ex-partner have already retired, the rules about pension splitting may be different. For example, you cannot take a lump sum from your ex-partner’s pension if they are already drawing it. 

There are also significant differences between what pension pots are taken into account depending on where you live:

In England, Wales or Northern Ireland 

The total value of the pensions you have each built up is taken into account. 

All of both partners’ private or workplace pensions is taken into account, including contributions they made before marriage or after separation. 

In Scotland 

Only the value of the pensions both partners built up during the marriage or civil partnership is taken into account. Any contributions that occurred before you got married or after your ‘date of separation’ will not count.5 

Finding out the value of your pension 

Q: So, what did it mean to you to have your own money? 

A: Everything. It meant everything.2

Only you can ask for a valuation of your pension. In the case of divorce, companies determine the value of pensions using ‘cash equivalent transfer value’, which is how much you would get if you moved your pension to somewhere else. The cash equivalent transfer value might be less than the actual value of your pension if it includes charges for transferring.

You can ask your pension provider for a statement that will give you the cash equivalent transfer value for divorce purposes. An annual statement is free. 

If you are in Scotland and have already separated, ask for the cash equivalent transfer value as it was on the date of your separation.

Pensions Advice Allowance

Starting in 2017, the Pensions Advice Allowance lets you take £500 from a defined contribution pension or ‘hybrid’ pension arrangement and use it to pay for financial advice about retirement. This £500 will not be subject to an unauthorised payment tax charge. 

“In terms of my own retirement, I have had no financial advice and feel this would be absolutely necessary for survivors of abuse, as we need someone we can trust to ask questions.”

If your partner dies 

How you receive a partner’s pension after their death depends on several factors. If they were already retired, you may receive a reduced amount of their pension for the rest of your life.

If they were not yet retired: 

  • Many schemes pay out a single lump sum, which is usually two or four times their salary. 
  • The lump sum is tax-free if they were under the age of 75 when they died. 
  • Providers often pay a ‘survivor’s pension’ to the deceased’s spouse, civil partner or dependent child if they have one. These payments are taxed. 

Marriage, civil partnership, and ‘common law’ 

Marriage and civil partnerships provide you with certain legal rights, including the ability to claim some of your ex-partner’s pension if you separate. A marriage ends with divorce, whereas a civil partnership ends in dissolution.  

Many people believe that if they have been living together for a certain number of years, they are in a ‘common law marriage’. This is a myth. 

Cohabitation, or living with a partner, does not grant you the legal rights of married couples if you separate. For example, you cannot claim maintenance, will not be able to share pensions and cannot share the value of the property unless it is already jointly owned.

Last updated January 2021

Further support 

If you are experiencing economic abuse, you are not alone. We have more information that can support you to take steps towards safety and begin to regain control of your finances.

References

  1. Sharp-Jeffs, N. with Learmonth, S. (2017). Into Plain Sight: How economic abuse is reflected in successful prosecutions of controlling or coercive behaviour. London: Surviving Economic Abuse. 
  2. Bishee, D., Daly, T., & Price, D. (2013). Behind Closed Doors: Older Couples and the Gendered Management of Household Money. Social Policy and Society.
  3. No age limit: Domestic abuse campaign. Age UK.
  4. Portas, J (2018). Solving Women’s Pension Deficit to improve retirement outcomes for all. Insuring Women’s Futures. (Derived from analysis of ONS Wealth & Assets data).
  5. Dividing pensions on divorce or dissolution. Money Advice Service.

*With special thanks to Paul Cobley and Debora Price for their expertise.

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