Pensions and Divorce: What Happens to Your Pension When You Divorce?

Is my husband or wife entitled to a share of my pension?

Yes, your spouse is often entitled to a portion of your pension in the event of a divorce, because your pension pot is usually classed as a ‘marital asset’ rather than an individual asset.

This principle applies to both marriages and civil partnerships, and it applies throughout the UK, although the specific rules can vary slightly depending on whether you live in England & Wales, Scotland, or Northern Ireland.

How are marital assets treated in a divorce?

In the UK, a marriage or civil partnership is recognised as an economic partnership where both partners contribute to the family's welfare and prosperity, whether those contributions take the form of salary or self-employed income, caring responsibilities, or supporting the other partner’s career. This means pensions built up during the course of the marriage are almost always classed as joint assets, even if the pension is only in one partner’s name.

How are Individual vs joint pension contributions treated?

It doesn't usually matter who made the pension contributions or whose employer provided the scheme (if it is a workplace one). What matters more is when the pension contributions were made, and how that relates to the timing of the marriage. Pension funds accrued during the course of a marriage are usually classed as joint assets and will be subject to sharing in the event of a divorce, whereas any money contributed to a pension either before the marriage date or after separation may well be treated as individual assets rather than joint ones.

Does the length of marriage and timing matter for pension entitlement?

The duration of your marriage and when pension contributions were made can affect how they're treated. A pension built up over a 20-year marriage is likely to be shared differently from one where the vast majority of the pension contributions were made before the date of the marriage or after separation.

What are common misconceptions regarding pensions and divorce?

Many people wrongly assume that pensions aren’t classed as matrimonial assets because they're in one person's name, or that stay-at-home partners have no claim to their working partner’s pension if they divorce. In reality, the courts recognise that both partners contribute to the marriage in different ways, making pension sharing a likely outcome when courts decide how to fairly share marital assets after a divorce.

Why do pensions matter in divorce settlements?

Since pensions are usually one of the biggest financial assets in a marriage, they often play a significant role in divorce settlements.

Pensions are an asset

While the family home is often the biggest marital asset, many pension pots can be as valuable as those properties, and some pensions may even be worth more than the family home.

In fact, the average pension pot at retirement amounts to almost £200,000 in the UK, while Defined Benefit pensions can be worth even more when valued as lump sums for sharing purposes.

Couples that get divorced well before retirement age might believe that their pension funds are less relevant during divorce agreements, especially if those pension pots only amount to less than a year’s salary. But it’s important to remember that even modest pension pots can grow a lot over time. So when it comes to a divorce settlement, it’s not just the current size of the pension pot that needs to be considered, but also the future growth of those funds and the income stream it will result in at retirement.

Importance of fair division for future financial security

Without pension sharing, one partner might be looking forward to a very comfortable retirement while the other struggles financially after they retire.

If pensions were excluded from divorce settlements the net result would probably be an unfair division of marital assets, and there’s a risk that that would have a particularly big impact on women who may have reduced their pension contributions due to caring responsibilities or part-time working hours during marriage.

What happens to pensions in a divorce?

Pensions are treated as part of the overall financial settlement in a divorce, with courts in the UK having the power to decide how to share pension savings between the two spouses or civil partners in order to achieve a fair settlement for both parties.

Regional differences

Exactly how pensions are treated during divorce proceedings depends on what part of the UK you live in.

• If you’re in England or Wales then the Matrimonial Causes Act 1973 and the Divorce, Dissolution and Separation Act 2020 will apply
• Scotland follows the Family Law (Scotland) Act 1985
• Northern Ireland’s rules are defined by the Matrimonial Causes (Northern Ireland) Order 1978 and the Family Proceedings Rules (Northern Ireland) 1996.

Still, even though the exact legislation varies a little by jurisdiction, in each part of the UK pensions are considered alongside all other marital assets including property, savings, investments, and debts when a divorce settlement is being agreed. The court aims to achieve an overall fair settlement rather than necessarily splitting each asset into two equal halves, meaning pensions might be divided differently if other assets offset those pension funds.

Marriages and civil partnerships

The rules about how pensions should be divided when a relationship ends only apply to married couples and those in civil partnerships. Cohabiting couples have no automatic rights to each other's pensions, regardless of the length of their relationship, how long they’ve lived together, or the nature of their shared finances.

How are pensions split in a divorce?

Courts have several options for dealing with pensions during a divorce, each with different advantages and implications for both parties' financial futures.

The main options are:

• Pension sharing orders
• Pension offsetting
• Pension attachment orders
• Deferred pension sharing
• Deferred lump sum orders

Pension sharing orders

Pension sharing orders transfer a specified percentage from one spouse's pension to the other, creating separate, independent pension pots for both parties.

How it works

With pension sharing, the pension scheme administrator:

• Calculates the cash equivalent transfer value (CETV) of the pension
• Applies the sharing percentage specified in the divorce settlement
• Either creates a new pension account for the receiving spouse within the same scheme, or transfers the money to a different pension scheme of their choosing.

Pension sharing is one of the most popular options because it provides complete independence after the pension funds have been redistributed. Each spouse or civil partner controls their own pension pot after the split, and can make independent decisions about investments, retirement timing, and how to access their pensions.

Pension offsetting

As the name suggests, pension offsetting involves offsetting the value of a pension against other marital assets, allowing one spouse to keep a larger share of the pension they’ve built up (or in some cases all of it, if the other marital assets are big enough), while the other partner receives a larger share of other assets like property, general investment accounts, or savings that is equivalent to the pension amount they might have otherwise received.

How it works

The calculation for pension offsetting requires careful consideration of the pension's true value compared to other assets, and the complexity of determining a pension’s future retirement income means this divorce settlement option often needs expert advice to ensure the offset amount is truly equivalent rather than a disadvantageous trade.

It also goes without saying that pension offsetting is only an option if there are sufficient other marital assets to offset the forfeited pension amount against.

Pension attachment orders (earmarking)

Pension attachment orders instruct pension providers to pay part of the future pension income or lump sum to the ex-partner when the pension member retires, rather than transferring a portion of that pension pot at the time of divorce.

How it works

When the pension begins paying out, the pension scheme pays a specified percentage to the ex-partner directly.

Unlike pension sharing orders, where the pension pot is shared, with pension attachment orders it’s the future retirement income that is shared.  That’s why it’s sometimes known as earmarking, because the pension stays in the same scheme, but part of its future income payments are earmarked for the ex-partner.

Pension attachment orders are less common nowadays than pension sharing orders, because sharing orders create financial independence whereas attachment orders keep the finances of ex-partners tied together.

Another reason attachment orders have fallen out of favour (and something to watch out for if you are considering this type of pension sharing agreement during a divorce settlement) is that these orders will often be nullified if the ex-partner gets remarried. That new marriage is classed as a new financial agreement that cancels out the previous pension attachment order.

Deferred pension sharing

Deferred pension sharing delays the sharing of a pension until that pension becomes payable, which means this option falls somewhere between a pension sharing order and a pension attachment order.

How it works

Deferred pension sharing works in a similar way to a pension sharing order, except that the split doesn’t happen until the pension is payable. It’s a useful option if it’s impractical to share a pension pot at the time of divorce but both parties eventually want complete financial independence from one another.

This option is less common than immediate pension sharing though, and is generally only used if there’s some sort of financial obstacle (or pension scheme rules) preventing the pension pot from being split immediately.

Deferred lump sum order

A deferred lump sum order requires the payment of a specified amount to the ex-partner when the pension member accesses their pension, providing a compromise between immediate and ongoing arrangements.

This approach might be preferable if the value of the pension is fairly small, or if there are other settlement terms that make a deferred payment appropriate, but it still creates ongoing dependency between the former spouses so many ex-partners would prefer a different approach to pension sharing.

Individual agreement

Couples can also choose to agree on how they’ll share their pensions without turning to the courts to mediate that agreement, although anything that they do agree must still be incorporated into a legally binding divorce settlement in order to ensure enforceability and proper implementation by pension schemes.

These types of private agreements can offer flexibility and convenience, and they’re usually a cheaper and quicker option than relying on a family court or county court for the divorce settlement. However, this option still requires very careful consideration and financial planning, and it would still be a good idea to seek legal advice in order to ensure the agreement is fair and complies with pension scheme rules.

What types of pensions can be shared in divorce?

Most types of pensions can be shared, although the specifics can vary a little depending on the pension type.

Defined Benefit (DB) schemes

Defined Benefit pensions, including public sector schemes like the NHS Pension Scheme, Teachers' Pension Scheme, and Civil Service schemes, can all be shared in the event of a divorce. This type of pension is usually shared through a pension sharing order.

Since the purpose of a DB pension is to offer a guaranteed retirement income, sharing a DB pension involves sharing the right to that future retirement income rather than sharing an actual pension pot.

Defined Contribution (DC) pensions

Defined Contribution pensions, including workplace pension schemes, SIPPs and other personal pensions, are usually fairly straightforward to share in the event of a divorce, since sharing these types of pensions involves splitting an actual pension pot rather than a right to future retirement income.

Personal pensions, SIPPs, stakeholder pensions

Every type of private pension can be shared, with the process usually involving transferring money to a new pension arrangement chosen by the receiving spouse.

SIPPs (Self-Invested Personal Pensions) might throw up a few complications if they hold alternative investments that aren’t as easy to split up, such as commercial property, but sharing is still possible.

State Pension

The State Pension is treated differently from private pensions and isn’t classed as a marital asset, so it can’t be shared between spouses who are currently in the process of agreeing a divorce settlement.

The old State Pension did include some provisions for sharing ‘Additional State Pension’ rights, but those rules changed in April 2016 and only applied to someone retiring before that date.

Factors courts consider when dividing pensions in a divorce

Courts will take a range of different factors into account when they’re deciding how to fairly share your pensions with your ex.

Length of marriage

The courts will differentiate between pension contributions made during the marriage and those that were made before or after the relationship, which means the longer the marriage lasted the bigger your ex-partner’s share of your pension pot is likely to be.

Age and health of each party

Courts will take each partner’s age and health into account when deciding how to share pensions in a divorce settlement, because those factors can have a big impact on someone’s ability to earn additional retirement income in the future.

If someone is nearing retirement age then the number of years they’ll have to replace lost pension income will obviously be much shorter, while someone who is unable to work due to a disability or ill health will also find it harder to replace that pension income.

Each party's financial needs and ability to earn

Current and future earning potential will be taken into account during a divorce settlement as well, including any career sacrifices that were made and how that might have impacted pension contributions in the past and earning potential in the future.

A spouse with limited earning potential might receive a bigger share of the pension pot in order to provide them with long-term financial security, while higher earners might get a smaller share because they’re better positioned to rebuild their retirement savings more easily through future contributions.

Contributions made (financial and non-financial)

In the UK, both financial contributions to a marriage (earnings and pension contributions) and non-financial contributions (homemaking, childcare, supporting the other partner’s career), are recognised as valuable to the marriage and its financial wellbeing.

A stay-at-home parent who supported their spouse's career is considered to have contributed to the pension pot even without direct financial contributions, because their caring responsibilities enabled the other partner to work more, earn more, and contribute more to their pensions.

Standard of living during the marriage

The lifestyle the couple enjoyed during their marriage can also affect pension sharing during a divorce, because a partner with lower earning potential might receive a bigger share of the pension in order to allow them to maintain reasonable living standards in retirement.

That doesn’t necessarily mean they’ll be assured the very same lifestyle as they enjoyed during the marriage, but it will be taken into consideration.

Children and caregiving responsibilities

Ongoing childcare responsibilities can affect a couple’s current financial needs as well as the future earning capacity of the primary caregiver, which means that one partner might receive a bigger share of a pension pot to compensate them for their reduced ability to build independent retirement savings as they continue to care for the children.

Divorce and pensions at different life stages

Your age when you get divorced can also play a role in pension sharing decisions during a divorce.

What happens to your pension if you divorce in your 30s or 40s?

Younger couples often have smaller pension pots, making them seem less important than property or other assets in divorce settlements. But pensions are long-term investments that can continue to grow for 20, 30 or 40 years, which means even small pension pots can grow into a significant retirement income.

The advantage of divorcing at a younger age is that both partners should have more time to rebuild retirement savings, but that doesn’t mean you should forget about the smaller pots that you’ve built up so far in your marriage. A £50,000 pension pot when you’re 35 could grow to £150,000 or £200,000 (or more) by the time you retire, so even smaller pots should be included in the settlement.

People in their 30s and 40s are also more likely to have younger children, so if you’re divorcing at this age it’s also important to assess the effect of caring responsibilities on earning potential.

What happens to your pension if you divorce in your 50s or 60s?

Older couples are more likely to have bigger pension pots, and for some people in their 50s and 60s the amount they’ve built up in those pensions could be worth even more than the family home. It’s vital to ensure that this asset is shared fairly between both partners, in much the same way that property would be.

At this age people also have less time to replace retirement income after the pension is split, and that reduced earning capacity can have a particularly big impact on one partner if they’ve spent much of the marriage caring for children or supporting their spouse’s own career.

In that scenario, the partner who has the lowest earning potential may well receive more than 50% of the pension pot in the divorce settlement.

Pension legal and financial advice during divorce

Dividing up financial assets during a divorce can be complicated, and that’s particularly true when it comes to pensions because those particular assets have bigger long-term ramifications beyond the pension pot itself. That’s why it would be a good idea to seek both legal advice and financial advice when you’re going through a divorce, and the larger your marital assets the more important this professional advice becomes.

Why is getting a pension valuation important during a divorce?

Obtaining accurate pension valuations is crucial for understanding what's at stake and ensuring fair division.  For Defined Benefit pensions the Cash Equivalent Transfer Value (CETV) represents what the pension scheme would pay to transfer your benefits elsewhere, providing the baseline for sharing calculations. CETV valuations can be influenced by market factors like interest rates, gilt yields, and inflation, and each pension scheme will also have its own rules for calculating the CETV of a pension within that scheme.

When should you involve a financial adviser or pension expert?

If you have complex pension arrangements or high-value pensions then it would be wise to consult a pensions expert, who can help you to weigh up the different settlement options and their long-term implications for both you and your ex.

In fact, there’s a whole niche of Pension on Divorce Experts (PODEs), who specialise in advising couples on how best to share their pensions during a divorce settlement.

What is your solicitor's role in securing a fair order?

Your divorce solicitor will negotiate with your ex-partner’s solicitor to reach a divorce settlement that is fair to both parties, taking both your pensions and your other financial assets into account.

Once a settlement has been agreed, they will guide you through the legal aspects of dividing your pensions, ensuring proper court orders and liaising with pension schemes in order to implement the agreed sharing arrangements.

What should you do if you have complex or high-value pensions?

High-value or complex pensions require advice and guidance from not just a family law solicitor, but also a financial adviser experienced with managing pensions.

Complex pension arrangements might include additional benefits like death-in-service cover, ill-health retirement options, or valuable early retirement provisions that could affect their true value beyond the basic CETV calculation.

International pensions or overseas transfers can add an additional layer of complexity, requiring specialist expertise in order to ensure proper valuation and division, particularly when it comes to tax.

What are common pension mistakes to avoid during a divorce?

A divorce is an intense and often emotional process for everyone involved, and it’s easy to make a mistake or do something without considering the long-term implications.

Let’s consider some of the most common mistakes people might make when they’re agreeing a divorce settlement.

Not including pensions in the financial settlement

When it comes to pensions, the biggest and most common mistake is ignoring them entirely, often because their value isn't immediately obvious or because both parties focus on more tangible assets like real estate.

This oversight can have very big ramifications in retirement, particularly for women who may have sacrificed career progression to care for children.

Even small pensions deserve consideration, as they can grow significantly over time and provide important retirement income. Failing to address all pension arrangements can leave one party with inadequate retirement provision.

Accepting offsetting without understanding long-term consequences

Agreeing to offset your right to a share of a pension in exchange for another apparently equal marital asset can be a mistake if the calculations haven’t been done correctly. Property might seem more attractive than future pension income, but pensions can provide inflation-protected income whereas most properties don't provide ongoing income unless they’re a buy-to-let.

In order for this arrangement to be fair, the offset calculation needs to consider the true value of lifetime pension income, tax implications, and the different characteristics of various assets. A pound of pension value isn't necessarily equivalent to a pound of property value in terms of long-term financial security.

Failing to get legal/financial advice

Attempting to divide up your pensions yourself without the right professional advice could result in unfair or impractical sharing arrangements. The complexity of pension valuations, tax implications, and long-term consequences mean you should get professional advice even if you aren’t going to court.

Overlooking pension death benefits or nominees

If you fail to update your pension’s death benefit nominations after you get divorced there’s a risk that your pension could pass to your ex instead of your intended beneficiaries.

It’s a good idea to review and update all pension arrangements, including the nominated beneficiaries, after the divorce is finalised, and if you get married again in the future you will probably want to review and update those arrangements again at that point.

FAQs about pensions and divorce

Can I keep my entire pension in a divorce?

It's possible, but usually only if you have other marital assets that the full pension can be offset against.

Courts view pensions as joint marital assets, so unless you and your ex-partner have a lot of other marital assets and are able to agree on offsetting, it’s more likely that each party will get a specified portion of those pensions.

Do I have to share my pension if my ex didn't contribute?

Yes, since your own pension pot is classed as a marital asset rather than an individual asset, your ex-partner will still be entitled to a share of it even if they didn’t directly contribute to that pot in monetary terms.

Courts recognise both financial and non-financial contributions to a marriage, including homemaking, childcare, and supporting the other spouse's career development, so your ex will still be seen as contributing to that pension in other ways.

What if I don't know how much my spouse's pension is worth?

You have the right to request pension information from your spouse's schemes through the divorce disclosure process. If your ex isn’t forthcoming the courts can order them to provide full pension details, and pension schemes must respond to properly made requests for information.

Your solicitor can help you obtain Cash Equivalent Transfer Values and annual benefit statements from all relevant pension schemes, ensuring complete financial disclosure before settlement negotiations.

How are pensions split in divorce?

The main types of arrangements you can use for splitting a pension in a divorce are pension sharing orders (creating separate pension rights), pension offsetting (offsetting a pension pot against other assets), and pension attachment orders (sharing future payments).

The most appropriate method depends on your circumstances, ages, and other assets available, but pension sharing is often favoured as it creates a clean break and financial independence.

Can my ex-wife or husband claim my pension after divorce?

Once your divorce settlement has been agreed you should ask your solicitor to draw up a consent order for your ex to sign, as this will turn the financial settlement you’ve agreed into a legally binding agreement. Once the consent order has been signed by both parties, your ex-partner usually can’t make further claims against your pension.

Can a pension be split after divorce is finalised?

Pension sharing orders usually have to be agreed as part of the divorce proceedings rather than after the divorce is finalised. After a financial settlement has been agreed and a consent order has been signed by both parties, it likely won’t be possible to claim a share of an ex-partner’s pension.

This highlights the importance of including all pension pots in the divorce agreement process, no matter how small those pots are.

How long does it take to implement a pension sharing order?

Once the court has issued a pension sharing order, the pension scheme administrators are legally obliged to implement that order within a specified timeframe, which in the UK is usually 4 months.

Some schemes might implement the order faster than that though, and schemes can also apply to the courts for an extension to this implementation period.

What happens to pensions in a separation, not divorce?

Legal separation without divorce doesn't automatically trigger pension sharing. Pensions generally remain unchanged during separation, although couples can make voluntary arrangements to share their marital assets if they wish.