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Demystifying Pension Sharing

Demystifying Pension Splitting: A Guide to Pension Sharing for Divorcing Couples

If you’re seeking a fair financial settlement from your divorce then you may have heard of a pension sharing arrangement, yet you may not have considered seeking one. Only 10% of surveyed divorcees in the recent Fair Shares? Sorting out money and property on divorcepublished in November 2023 by the University of Bristol and the Nuffield Foundation, found they had a pension sharing arrangement upon divorce, why is this number so low? This may be down to not being aware of the importance of the pension, what a pension sharing arrangement is and the advantages of agreeing to one. This could be for a number of reasons, including a lack of legal advice and/or guidance as to your rights.

Alongside the family home, each divorcee’s pension is likely to be one of their biggest assets financially and is incredibly important for future planning. 

A good example of how important this would be is a wife who has not worked for years, and is thus in a more precarious financial position, perhaps taking on the role of caregiver to young children and looking after the family home, resulting in having a smaller pension pot and less income than her spouse. So, to achieve a fair outcome, couples should look at pension sharing to provide long-term financial stability and fairness upon divorce.

What is a Pension Sharing Arrangement?

A pension sharing order can only be successfully made through an order approved by the court. Pension providers and schemes cannot transfer or divide a part of someone’s pension without prior instruction from the court, through a pension sharing order.  This can be a smooth process especially if there is agreement between the parties in the form of a consent order and pension annex. An application to court will be necessary, however, if you have agreed your financial settlement, this is a paper exercise rather than a physical hearing at a court

When considering financial settlements or pensions in a long marriage, it’s worth bearing in mind that “pension pots accumulated during the course of the marriage should be shared equally.”

If a pension is to be shared fairly, a cash equivalent transfer value (CETV) for each pension should be obtained. Pension providers can be slow to produce this information (depending on type of pension) as calculations for divorce purposes are required.

If a pension pot is worth more than £100,000 it may be worth instructing a pension actuary / expert to calculate how best to share a pension to either provide equal capital or equal income upon retirement.

Once an agreement as to the percentage split has been settled (either by agreement or court order) this can be sent to the pension provider to action.

This approach may be preferred to “offsetting” the pension against other assets as pensions are not necessarily considered £1 or £1 due to taxation, costs, and accessibility to the full fund.

Pension sharing does what it says on the tin! A pension can be split, and the finical split moved from one person to the other. For example; a husband has a work-based pension worth £360,000. The wife is eligible to half. A pension share for say 50% can be transferred to a fund for the wife. The parties would each have a fund of £180,000 each to draw from.

The parties can then choose to, depending on circumstances, allow the pension credited party to join the other party’s original pension scheme. Or it could be that the share can be transferred to an already existing or new pension scheme that is applicable. The relevant experts can help to arrange this.

Advantages of Pension Sharing Orders

The main advantage is that it helps to provide a fair, equal, split of financial assets. This allows for provision for both parties to have a fairer share of income from their pension in the future. When divorcees are coming out of a long marriage financial planning for the future, as opposed to immediately after the divorce, is incredibly important.

How we can help

To achieve a fair pension sharing agreement and order, there needs to be full disclosure as to the assets and details of each party’s pension. Our qualified, experienced legal team can help with disclosure, negotiation of a fair deal as well as processing through the courts, if needed.

Please get in touch with our Family Team by calling 01242 574 244 or emailing

Contact our experts for further advice

The information contained on this page has been prepared for the purpose of this blog/article only. The content should not be regarded at any time as a substitute for taking legal advice.