When going through a divorce, many couples focus on dividing property, savings and income – but pensions are just as important. In fact, pensions can often be one of the largest assets in a marriage. Yet they are frequently misunderstood or overlooked entirely.
Whether you or your spouse has a pension, it is likely to be considered a matrimonial asset. That means it could be shared as part of your financial settlement. Understanding how pensions are valued and divided under UK law is essential to protecting your long-term financial security.
In this guide, we explain what factors influence pension entitlements in divorce and how you can estimate what you may receive or retain – including our quick and easy divorce calculator.
Why pensions are a key part of divorce settlements
Pensions are not automatically split 50/50 – but they are usually included in the financial picture, especially if the pension was built up during the marriage. This includes private pensions, workplace pensions and some personal pension schemes.
Even if one partner made all the contributions, the law often treats pension value as a shared resource. That is because both parties are seen to have contributed to the relationship, whether financially, emotionally or through childcare and domestic roles. As a result, the court will look to achieve a fair outcome that considers each person’s needs and circumstances.
Legal framework for dividing pensions
In England and Wales, pensions can be divided in a number of ways during divorce proceedings. These are the three main options:
- Pension sharing order – This is the most common approach. A portion of one person’s pension is legally transferred to their ex-partner. The recipient gets their own pension pot, which they can manage independently.
- Pension offsetting – Instead of dividing the pension itself, one partner may keep their pension while the other receives more of another asset, such as the house or savings.
- Pension attachment order – This allows a share of the pension to be paid to an ex-spouse when the pension holder starts receiving their benefits. However, this method offers less financial independence and is used less often.
The court will choose the method that delivers the fairest result based on your financial situation, age, health and plans for the future.
What determines how much you are entitled to?
The exact amount of pension you are entitled to in divorce depends on a range of factors. These include the total value of the pension, the length of the marriage, whether the pension was built up before the relationship began and each person’s financial needs moving forward.
If the pension was accrued entirely during the marriage, it is more likely to be split equally. However, if some of it was built up before the marriage or after separation, only part of it may be considered a matrimonial asset.
Courts also take into account whether both parties have their own pensions. If one spouse has no pension or a significantly smaller one, the court may seek to address that imbalance to ensure both parties have a secure future.
In many cases, a financial adviser or pension expert will be asked to provide a Cash Equivalent Transfer Value or undertake a full pension sharing report. This gives a more accurate picture of how much the pensions are worth and what a fair split might look like in real terms.
Valuing pensions fairly and accurately
Not all pensions are equal and working out their true value can be complex. Defined contribution schemes are based on how much money has been paid in, while defined benefit schemes such as final salary pensions are based on salary and length of service.
This makes it essential to seek professional advice when assessing the value of pensions in divorce. Some pensions may appear to have a high transfer value but offer lower retirement benefits. Others may offer guaranteed income or inflation protection.
Specialist pension reports can help both parties and the court understand the real impact of different settlement options and avoid costly mistakes.
Do you have to go to court to split a pension?
Not always. If you and your former partner can agree on how to divide your finances including pensions, you can record your agreement in a legally binding consent order. This must be approved by the court to make it enforceable.
However, if you cannot reach an agreement, the court will decide on your behalf as part of the wider financial settlement. Either way, it is important to be transparent about your pension assets and obtain the right legal and financial advice.
Need help calculating your likely share of pension assets?
Understanding how much pension you may be entitled to can be challenging, but you do not have to do it alone. At Osbourne Pinner Solicitors, we specialise in divorce and financial settlements, including pension sharing and asset protection.
To get a clearer idea of your entitlements, you can use our free divorce settlement calculator. It takes just a few minutes and can help you plan your next steps with confidence.
We also offer a free 30 minute consultation to discuss your case. Contact us today via the form below, call 0203 983 5080 or email [email protected] to speak to a solicitor. You can visit us in Harrow, Canary Wharf, Piccadilly Circus and Manchester or talk to our team remotely.
