What Happens to Pensions When You Separate?
When couples separate, pensions are often one of the most valuable — and most overlooked — assets to deal with.
Many people focus on the family home or savings, but pensions can be worth as much as, or even more than, property. Understanding how they are treated in divorce is essential to reaching a fair financial settlement.
Are Pensions Included in Divorce Settlements?
Yes, in England and Wales, pensions are considered part of the overall financial picture when dividing assets on divorce under the Matrimonial Causes Act 1973.
This means the court can take pensions into account alongside:
- Property
- Savings
- Investments
- Income
The aim is to achieve a fair outcome, particularly where one person may have sacrificed career progression (and pension contributions) during the relationship.
How Are Pensions Valued?
The starting point is usually the Cash Equivalent Transfer Value (CETV) — a figure provided by the pension provider.
However, this figure doesn’t always reflect the true value, especially for:
- Final salary (defined benefit) pensions
- Public sector pensions
In more complex cases, a pensions expert (actuary) may be needed to provide a more accurate valuation.
The Main Ways Pensions Are Divided
There are three main approaches:
1. Pension Sharing Orders
This is the most common and often the fairest option.
A Pension Sharing Order splits a pension at the time of divorce, giving each person their own separate pension pot.
- Provides a clean break
- Creates independence for both parties
- Implemented after the Final Order
2. Pension Offsetting
Instead of splitting the pension, one person keeps their pension while the other receives a larger share of other assets (such as the family home).
This can work well where:
- There are sufficient assets to offset
- Both parties understand the long-term impact
However, it requires careful calculation — pensions and property are not directly comparable.
3. Pension Attachment Orders
Less commonly used, these orders allow one person to receive future pension income from the other’s pension.
- Does not provide a clean break
- Payments depend on retirement
- Can create ongoing financial ties
When Do You Need to Deal with Pensions?
Ideally, before finalising your divorce.
It can be risky to apply for the Final Order without resolving financial matters, including pensions. Once the divorce is final, certain rights — such as spousal pension benefits — may be affected.
What Factors Does the Court Consider?
The court looks at a range of factors, including:
- Length of the marriage
- Each person’s financial needs
- Age and proximity to retirement
- Contributions made during the relationship
The goal is fairness — not necessarily a strict 50/50 split.
Why Pensions Are Often Overlooked
Pensions can be easy to ignore because:
- They feel “locked away” for the future
- They are complex to understand
- Their value isn’t always obvious
However, overlooking a pension can lead to a significant financial imbalance later in life.
This article is for information only and should not be relied on as legal advice. For specific advice, please contact our expert solicitors.
Zubair Dharamsi Gowsigan Gnanakumaran Maisa Riazi
Partner Solicitor Trainee Solicitor
zd@roselegal.co.uk gg@roselegal.co.uk mr@roselegal.co.uk
