Divorce is never easy. On top of the emotional toll, there’s the complex process of dividing everything you’ve built together — from your home to your savings. But one thing people often overlook? Pensions.
Yes, that retirement pot you’ve been quietly paying into for years might be part of the settlement. Here’s what you need to know — in plain English — about pension sharing when you divorce.
Why Pensions Matter in Divorce
Pensions can be one of the most valuable assets in a marriage—sometimes even more than the house. If one partner works and contributes to a pension while the other stays home or earns less, splitting fairly often means sharing that pension.
This is especially important in long-term marriages or civil partnerships, where retirement plans are built together, even if only one person’s name is on the pension.
Three Main Ways Pensions Can Be Divided
When a couple divorces in England and Wales, the court can deal with pensions in three main ways:
1. Pension Sharing
This is the most direct and standard method. The court orders that a percentage of one person’s pension be transferred to the other. The person receiving the share can then move it into their pension pot.
Example:
Sarah has a pension worth £100,000. The court decided her ex-partner, John, should get 40%. John receives £40,000 into his pension scheme. Sarah keeps the remaining £60,000.
2. Pension Offsetting
Here, the value of the pension is offset against other assets. So, one person keeps the full pension, and the other might get more of the house, savings, or other assets to “balance” things out.
Example:
Instead of splitting Sarah’s pension, John might get a bigger share of the house’s value.
3. Pension Attachment (less common)
This is like a maintenance order. When the pension is eventually paid out, part of it goes to the ex-spouse. But it’s risky because payments only happen when the pension is accessed—and they stop if the pension holder dies.
What You’ll Need
Before dividing anything, you’ll need your pension’s cash Equivalent Value (CEV). This estimates how much your pension is worth today, and the court must decide what’s fair.
You’ll also want to work with:
- A family solicitor experienced in pensions
- A financial adviser to help you understand the long-term impact
Final Thoughts: Plan for the Future
Dividing a pension now affects your future financial security. It’s not just about today — it’s about your retirement. That’s why it’s worth getting good advice and taking the time to understand your options.
Divorce can feel like an ending — but with the proper steps, it can also be a new beginning, where both people get a fair start on the next chapter of their lives.
Need help with a family matter? Contact us today for your free 30-minute telephone consultation.
