Pension Orders in Divorce: Sharing, Attachment & Offsetting

Pension Orders in Divorce: What You Need to Know

Pensions are often one of the most valuable - and complex - assets in a divorce. Whether you’re concerned about protecting your retirement savings or claiming a fair share of your spouse’s pension, it’s important to understand how UK courts treat pensions during financial settlements.

For many people, their pensions form their future financial security. Furthermore, in many divorces, there is a significant disparity between each party’s pension, often due to one spouse giving up work or working part-time to help raise children. Given these considerations, many people going through a divorce naturally have concerns as to what will happen to their pension pot, and how they will financially support themselves once they reach retirement age.

Are Pensions Considered in Divorce Settlements?

Yes. Pensions are treated as matrimonial assets and can be divided just like property, savings, or investments. This includes:

• Workplace pensions
• Private pensions
• Defined benefit and defined contribution schemes

Before deciding how to divide pensions, both parties must obtain accurate valuations - usually in the form of a Cash Equivalent Transfer Value (CETV).

What Are the Main Types of Pension Orders in Divorce?

1. Pension sharing orders

The most common method of dividing a pension following a divorce is through a pension sharing order. A pension sharing order transfers a lump sum of one party’s pension to the other party. The receiving party gets a pension credit, which is invested in a separate pension in their name. As such, each party will have their own separate pension from then on and will not benefit from each other’s post-divorce pension contributions. 

This method is preferred because it creates a clean break between the parties through each party having their independent pension pot post-divorce, giving certainty and control.

2. Pension attachment orders

In contrast, a pension attachment order does not split the pension into two separate pensions.

Once the portion of the pension to be provided to the other party is agreed, the pension provider will be notified, and they will pay this directly to the other party when the pension member retires.  

This method is less common for a few reasons:

• The order does not achieve a clean break between the parties
• Payments stop upon the paying party’s death, so if they die before retiring, the recieving party will not recieve any payment
• The order ends upon the re-marriage of the recieving party

As a result, it is uncommon for the court to make it instead of a pension sharing order.

In this sense, it may be helpful to think of a pension attachment order as being similar to spousal maintenance.  

3. Pension offsetting

In pension offsetting, instead of dividing the pension, one party keeps their pension while the other recieves a greater share of other assets (e.g. property or savings). 

This method works well for high-value pensions, or in cases where one party wants to retain the pension intact.

How Do Courts Decide Which Pension Order to Use?

Courts consider:

• The value of the pension
• The length of the marriage
• Each party’s financial needs
• The standard of living during the marriage

The goal is to achieve a fair outcome, not necessarily an equal split.

If you are concerned about your entitlement to your spouse’s pension, or your spouse’s entitlement to your own, contact Vardags today for a free consultation with one of our specialist divorce solicitors.   

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Frequently Asked Questions

Q: Can my spouse claim part of my pension in a divorce?

A: Yes. Pensions are considered matrimonial assets and may be shared.

Q: What is the most common pension order?

A: Pension sharing orders are most common because they allow for a clean break. However, what is ordered will depend on the facts of your case.

Q: Will I lose my entire pension?

A: The court will only divide the portion deemed fair, based on your circumstances.

Q: Can I keep my pension and give up other assets?

A: Yes. This is called pension offsetting and may be agreed or ordered by the court.