MacGillivray offers some practical ideas, although not many seem palatable. He warns: "If [the woman] has little in the way of relevant UK earnings, there is not much that can be done, unless they are prepared to forego tax relief, and assuming they have sufficient capital to make contributions in the first place."
In situations where they have reasonable relevant UK earnings, and affordability is not an issue, he says the "critical aspect is to maximise their pension contributions as early as they can".
This might be most useful for women in their 40s and 50s - especially considering the ONS says the average age for divorce is 46.4 for men and 43.9 for women as of 2019.
If a woman in middle age has not been saving much - or anything - into a pension of her own beforehand, she will need to do a lot, and fast.
MacGillivray explains various ways advisers can help clients in this situation:
- If possible, use the current year’s annual allowance and any unused AA from the previous three years. It may be that they have to phase this over a few years. For example, use this year’s AA and as much of the any unused AA from the previous years, then the next year, fully use the AA again for that year and any remaining unused AA they have carried forward, and so on – ‘use current year, use unused, repeat’.
- If they have the earnings, but affordability is an issue, then it may be worth considering remortgaging to release capital from the home. It was possible, at least recently and subject to meeting the relevant criteria, to lock in a five-year fixed rate at under 1 per cent.
- If funding contributions towards an acceptable level of pension is not viable and the main or only asset is the individual’s home, then equity release may be an option to consider in retirement. The market has come on in leaps and bounds over the years and could provide a flexible solution to the problem.
But Price does not think equity release is always viable. She explains: "The best way to release equity without the risks attached is to sell and trade down, but again, if you are living in a terraced house outside of London, it is not easy to trade down."
Importance of the valuation
The adviser can also help the client ascertain the true value of the home, as all too often, a failure to get a professional valuation from the Royal Institution of Chartered Surveyors, independent of an estate agent's valuation, can go against a client in court.
