DIVORCE // Pensions and Divorce: An Essential Guide
Dividing pensions on divorce is one of the most overlooked, yet most critical, aspects of financial settlement. While homes and savings often take centre stage, pensions can quietly hold more value than any other asset, shaping your security for decades to come. This guide distils the complexities into clear, practical steps, helping you understand your rights, the options available, and how to protect your future. Whether you are negotiating directly, working with a mediator, or preparing for court, this resource will equip you with the knowledge to make informed, confident decisions.
Divorce or the end of a civil partnership is one of life’s most stressful transitions. With immediate concerns like housing and income taking priority, pensions are often overlooked. Yet they are frequently among the most valuable assets in a marriage, sometimes even more valuable than the family home. Ignoring them risks serious financial hardship later in life.
This guide explains, in straightforward terms, why pensions matter in divorce, the key steps in dealing with them, and the choices you may face.
Why Pensions Matter
Security in later life: Pensions provide your retirement income. If you ignore them during divorce, you may struggle financially in the future.
Part of the marital pot: Regardless of whose name is on the policy, pensions built up during marriage or a civil partnership are generally treated as joint assets.
Career breaks matter: If one partner paused work to raise children or provide care, they will usually have a smaller pension. Divorce can make catching up impossible.
Hard to fix later: Pensions need to be dealt with during divorce. Revisiting them years down the line is complex and often impossible.
The Court’s Approach
When deciding financial settlements, the court considers all assets, property, savings, income, and pensions, with children’s needs as the priority. The goal is fairness, which doesn’t always mean a 50/50 split.
There are three main ways pensions can be handled:
Pension Sharing Order – The court directs a pension provider to transfer a percentage of one partner’s pension into the other’s name. This creates independent pots for each person.
Offsetting – One partner keeps more (or all) of their pension while the other takes a larger share of another asset, such as the family home.
Pension Attachment Order – A portion of future pension income or lump sum is paid directly to an ex-spouse. Rare today, as it ends if the pension-holder dies or the recipient remarries.
Practical Steps
Stage 1: Find out pension values
Request statements and cash equivalent transfer values (CETVs) for all pensions (state and private).
Use the Pension Tracing Service if you’ve lost track of old schemes.
Stage 2: Exchange information
Both parties must disclose full pension details to each other, and to the court if necessary.
Stage 3: Seek expert input
A pensions on divorce expert (PODE) or regulated financial adviser can calculate how pensions should be fairly split, particularly with complex schemes like public sector or defined benefit pensions.
Stage 4: Explore settlement options
Compare the long-term value of pensions versus immediate assets. Avoid trading pensions away lightly, a home may seem more useful now, but pensions provide income when you can no longer work.
Stage 5: Formalise the agreement
A settlement is only legally binding once it is turned into a court order (often called a consent order if both agree). Without it, claims could be made years later.
Key Insights
Pensions are not “yours” or “theirs”, they are part of the shared marital estate.
Defined benefit pensions (e.g. police, NHS, armed forces) can be extremely valuable and often worth more than property.
The value written on a pension statement (the CETV) doesn’t always reflect the true retirement income it will provide. Expert guidance is often essential.
Decisions made in haste can have lifelong consequences, especially if one person gives up rights without understanding the implications.
Pensions on Divorce Checklist
Gather details of all pensions (yours and your ex’s).
Request cash equivalent values (CETVs).
Obtain a state pension forecast.
Exchange information openly.
Seek advice if pensions are significant or complex.
Consider the long-term implications of offsetting.
Secure a binding court order for your settlement.
Where to Find Help
MoneyHelper : Independent, government-backed guidance on pensions.
GOV.UK Pension Tracing Service: Find old or lost pensions.
Resolution: Directory of family lawyers and mediators.
Specialist Pensions on Divorce Experts (PODEs): For technical pension valuations.
