What Happens to Pensions on Divorce in the UK?

Pensions are often one of the most valuable assets in a marriage, yet they are frequently misunderstood or overlooked during divorce. Many people are surprised to learn that pensions can be shared, even if only one spouse built up the pension in their own name.

If you are divorcing or considering divorce, understanding how pensions are treated in England and Wales is essential to ensuring a fair financial settlement and long-term financial security.

Are Pensions Considered an Asset on Divorce?

Yes. In the UK, pensions are treated as a matrimonial asset and are taken into account when dividing finances on divorce.

This applies regardless of:

• Whose name the pension is in

• Whether one party paid into the pension

• Whether one spouse took time out of work to care for children

The court’s aim is fairness, not simply equal division, and pensions can form a significant part of that assessment.

Pensions on Divorce UK: Key Things You Need to Know

Most types of pensions can be considered, including:

• Workplace pensions

• Personal and private pensions

• Occupational pension schemes

• Self-invested personal pensions (SIPPs)

The State Pension cannot be shared in the same way as other pensions, but it may still be relevant when assessing overall financial needs.

How Are Pensions Divided on Divorce?

There are three main ways pensions may be dealt with during divorce proceedings.

Pension Sharing Orders

A pension sharing order allows a percentage of one spouse’s pension to be transferred into a pension in the other spouse’s name. This provides a clean and clear division, giving each party control over their own pension going forward.

This is often the preferred approach, particularly where a clean break is sought.

Pension Offsetting

Pension offsetting involves one party keeping their pension while the other receives a greater share of other assets, such as property or savings, to balance the overall settlement.

While this can work in some cases, it requires careful consideration, as pensions and capital assets are not always directly comparable.

Pension Attachment (Earmarking)

Pension attachment orders allow one spouse to receive benefits from the other’s pension when it is eventually drawn. These are less commonly used because they do not provide a clean break and leave the parties financially linked.

How Does the Court Decide What Is Fair?

When deciding how pensions should be divided, the court considers factors such as:

• The length of the marriage

• Each party’s financial needs

• Age and retirement plans

• Earning capacity

• Health and future financial security

• Contributions made during the marriage

An equal division may be a starting point, but it is not automatic. The outcome will depend on the individual circumstances of the case.

Do I Need a Pension Valuation?

In most cases, yes.

Pensions can be complex, and their value is not always obvious. A pension valuation, often referred to as a Cash Equivalent Transfer Value (CETV), is usually required to understand the true worth of a pension and how it should be factored into a settlement.

In some cases, expert pension advice may also be recommended.

What Happens If Pensions Are Not Dealt With Properly?

Failing to address pensions can lead to:

• An unfair financial settlement

• Significant income disparity in retirement

• Ongoing financial insecurity for one party

• Difficulty correcting the position later

Once a financial order is approved, it can be difficult to revisit pension arrangements, making it crucial to get it right from the outset.

Why Legal Advice Is Important

Pension division on divorce is one of the most technical aspects of financial settlements. Legal advice ensures:

• All pensions are identified and disclosed

• The correct method of division is used

• The settlement is fair and sustainable

• The pension arrangements are properly reflected in a court order

Mistakes or omissions can have long-term consequences.

How Evalen Law Solicitors Can Help

At Evalen Law Solicitors, we regularly advise clients on pensions and financial settlements following divorce. We work closely with clients to ensure pensions are properly considered and that financial agreements protect their future interests.

If you are concerned about what will happen to your pension on divorce, our family law team can provide clear, practical advice tailored to your circumstances.