How are Pensions Split in a Divorce in the UK?

What the Law Says, and How it’s Evolved

The introduction of no-fault divorce in 2022 made the legal process more straightforward, but it was the updated guidance from the Family Justice Council in 2024 that placed pensions firmly under the spotlight. This guidance made it clear that all pensions must be included in your divorce proceedings, no matter their size or type. The Council also strongly encourages that you engage with a pension expert early on in the process, and that pension assets should be valued and divided fairly. 

If you live in England, Wales, or Northern Ireland, then both you and your ex-spouse’s pension assets, including those built up before your marriage, are potentially on the table. In Scotland, only the portion you have built up during your marriage is taken into account. This distinction is extremely important, and may influence how your negotiations unfold. 

Your Options for Splitting Pensions

There’s no one-size-fits-all approach when it comes to dividing your pensions. Instead, the court (or a negotiated settlement) will take one of three approaches, depending on your individual circumstances:

1) Pension Sharing Orders

This is the most straightforward approach for splitting your pensions. A percentage of your partner’s pension will be legally transferred to you, and vice versa. This creates a clean break and allows both you and your former partner to manage your shares independently.

2) Pension Offsetting

With this approach, either you or your partner will agree to keep more of another asset, such as property or savings, in return for the other to retain their full pension. However, this isn’t always a fair swap because a pension offers long-term income, whereas a house doesn’t.

3) Pension Attachment (Earmarking) Orders

A pension attachment or earmarking order allows you to receive income from your partner’s pension when it’s paid, or vice versa. But it’s important to consider that this approach gives you less control over when and how you can access the pension, so it isn’t widely used today.

Real-Life Pension Splitting Scenarios

Let’s take a closer look at two common situations that often arise during divorce when pensions are involved. These examples illustrate how overlooking your pension assets or misunderstanding the rules around them can have a long-term impact on your future finances. 

Scenario 1: The Career Break Parent

Anna stepped back from work to raise her children, and her ex-partner’s pension continued to grow during that time. Without a pension sharing order, Anna risks a major shortfall after their divorce. By appointing a specialist divorce financial adviser, Anna could have gained a clearer understanding of the long-term value of her former spouse’s pension and ensured that a fair pension sharing order was put in place to reflect her contribution to the marriage. 

Scenario 2: A Second Marriage

Ben had a substantial pension before he married Carla. After ten years together, they decided to separate. In England and Wales, Ben’s entire pension would be considered in the proceedings; but in Scotland, only the portion he accrued during the marriage counts. A financial adviser could help to clarify what’s in scope and model how different outcomes might impact their future retirement plans. 

Planning Beyond the Split

Dividing pensions is just one part of the picture. To truly understand how to plan for a divorce financially, you need to look beyond the immediate split and consider how your day-to-day life might change post-divorce. Will your income be enough to maintain your lifestyle? And how will your pension savings support you in retirement?

That’s why we always encourage you to build up a cash flow forecast. This tailored projection helps you:

• Map out your income and expenses over time
• Factor in your child or spousal maintenance, state benefits, and future pension income
• Identify any potential shortfalls or opportunities regarding your retirement income
• Make informed choices about your housing, employment, and retirement plans

Once you’ve got a realistic view of your finances, you’re better equipped to negotiate a settlement that meets your needs today, as well as supporting your future security.

Helping You Move Forward with Clarity and Confidence

Divorce can be an extremely challenging process, bringing with it emotional upheaval and some big financial decisions. In the rush to sort your current assets out, it can be tempting to ignore your pensions or treat them as a secondary issue. But doing so can compromise your long-term security.  

We provide expert financial planning for divorce to help you navigate every step with clarity and confidence. We’ll take the time to build up a complete picture of your assets, pensions, and finances, and help you negotiate a settlement that takes into account both your current and future needs. 

Book your free consultation today to discover how we can help you financially plan for divorce.