Industry experts have warned that pensions are still being "widely underestimated" in divorce proceedings, with analysis from Interactive Investor revealing that spouses could be missing out on up to £665,000 by excluding pensions in divorce settlements.

The analysis, which was shared to coincide with ‘Divorce Day’ (6 January), found that, based on an initial pension value of £100,000 at age 40 and assuming retirement at 68, a spouse could forgo a financial asset worth over £196,000 if the pension is excluded from the divorce settlement, assuming annual growth of 5 per cent over a 28-year period.

Assuming that the couple agreed to to a pension-sharing arrangement, which split the pension 50:50, this means that if the pension grows by 7 per cent annually, the shared pot would rise to over £332,000.

But the financial impact is even more significant with larger initial pension values, as the analysis showed that a £200,000 pension, for example, could grow to over £392,000 at 5 per cent annual growth or nearly £665,000 at 7 per cent annual growth over the same period.

Interactive Investor senior personal finance analyst, Myron Jobson, highlighted the findings as demonstration that pensions are "widely underestimated" in divorce proceedings, with the majority of divorcing couples failing to even discuss them.

"This oversight leads many—particularly women—to miss out on future income that should have been theirs," he continued.

"A pension left invested over a long period of time is turbocharged by the power of compounding, where growth is not only on the original contributions but also on previous returns, significantly increasing the overall value of the pot overtime.

“The emotional toll of divorce, the misconception that other assets take precedence, and a lack of awareness about the long-term financial implications are key reasons why pensions are often ignored.

"Adding to the confusion is the ever-changing pensions landscape, which makes assessing the long-term value of pension pots more challenging."

Pensions were also highlighted as one of the most common financial pitfalls for separating couples in seperate research from Legal & General (L&G), which found that while divorcing couples often consider the value of their family home (50 per cent), just 13 per cent consider pensions when dividing assets with their partners.

In addition to this, more than a fifth (23 per cent) actively waived their rights to the value of their pension.

This can have a huge impact in later-life, according to L&G, particularly if one partner stayed at home to take on childcare, or other caring responsibilities, during the marriage, leaving them with less in their own retirement pot.

Some savers are more aware of the importance of a pension though, as research from Charles Stanley found that pensions are a big topic of discussion for high-net-worth (HNW) women, as 20 per cent said this was a top item of conversation when discussing their divorce and what assets would be split.

However, even amongst HNW women, less than a fifth (18 per cent) consulted with a financial adviser to understand their financial situation.

A lack of awareness appeared to be a key factor in this, as the research revealed that nearly a fifth (19 per cent) of HNW women said they wished they were more aware of their financial circumstances before they divorced.

Indeed, Jobson emphasised that while no one enters a marriage expecting a divorce, understanding household finances is "crucial", as it can help provide clarity on entitlements in the event of a breakup but also help couples make informed financial decisions during their relationship.

Given these concerns, industry experts stressed the need for savers to take appropriate advice, with L&G Retail chief customer and strategy officer, Paula Llewellyn, stating: “We understandably focus much of our energy on the emotional side of separation but, as our research shows, money is an important factor that shouldn’t be ignored.

“There are lots of things to consider and a qualified financial adviser might be the best person to speak to to make sure nothing is overlooked and that the divorce is fair and equal for all involved.”

Adding to this, Jobson said: "Pension considerations in divorce are complex and need careful evaluation. Offsetting pensions against other assets may suit some couples, while splitting the pension or earmarking future payouts may work for others.

"These issues become even more intricate when either party has been married before. It is worth consulting a solicitor to understand the legal and financial implications of pension division.”

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