Are Pensions Considered Assets in Divorce UK?

When couples divorce, dividing finances can be one of the most complex and sensitive parts of the process. One question that often arises is whether pensions are considered assets and subject to division. The simple answer is yes, pensions are usually treated as marital assets in the UK and can be shared between both parties.

Are Pensions Considered Assets in Divorce UK? Why They Are Divided

For many people, a pension is the largest or second-largest asset they own, after the family home. Even if only one spouse has built up a pension, the law recognises that both partners contribute to the marriage in different ways.

• A spouse who took time out of work to raise children may not have been able to contribute to their own pension.

• Another spouse may have focused on their career and built a significant retirement fund.

Fairness is the guiding principle of divorce settlements, which means pensions are included in the overall financial picture.

How Pensions Can Be Divided

There are several ways pensions may be dealt with in divorce:

Pension Sharing Orders

The court can order that a percentage of one spouse’s pension is transferred into a pension scheme for the other spouse. This provides a clean break and gives both parties control over their own retirement funds.

Pension Offsetting

Instead of dividing the pension directly, its value can be offset against other assets. For example, one spouse might keep a larger share of the family home while the other retains their pension.

Pension Attachment Orders (Earmarking)

Part of a pension is earmarked so that, when it is paid out, a portion goes to the other spouse. This method is less common as it keeps financial ties open long after the divorce.

Factors Considered in Pension Division

When deciding how pensions should be divided, the court looks at the same factors as for other financial assets, including:

• The income, earning capacity, and resources of each spouse.

• The financial needs and obligations of both parties.

• The age, health, and future earning potential of each spouse.

• The needs of any dependent children.

• Contributions made during the marriage, both financial and non-financial (e.g. childcare or homemaking).

Are State Pensions Divided?

While most pensions can be shared, the basic State Pension cannot be divided in a divorce. However, certain elements of the additional State Pension (for example, SERPS or State Second Pension) may be considered.

Why Legal Advice Is Essential

Pensions are complex assets, and their value can be difficult to calculate. Professional pension valuations are often required, particularly for final salary or defined benefit schemes. A solicitor can help you:

• Understand the true value of pensions in your case.

• Decide whether pension sharing, offsetting, or another method is best.

• Secure a legally binding court order to prevent future claims.

No Time Limit Without a Settlement

It is important to note that unless you obtain a legally binding financial order, there is no time limit for making financial claims after divorce. This means an ex-spouse could bring a claim against your pension many years later. A financial consent order or clean break order provides the necessary protection.

Pensions are considered assets in UK divorce law and are subject to division like other financial resources. How they are divided will depend on your circumstances, the length of your marriage, and what is fair for both parties.

If you are divorcing and unsure how your pension will be treated, our experienced family solicitors can advise you on your options, ensure your settlement is fair, and help protect your financial future.