13/05/2026
Pension Sharing in Family Law: A Practical Guide
When couples separate, dividing assets can be complex and emotionally charged. Assets include not only those owned in joint names, but also assets in the sole name of one of them, such as pensions which are often among the most valuable assets.
Pension sharing, a legal mechanism designed to divide pension assets fairly, plays a crucial role in achieving financial fairness between separating spouses.
Pension sharing is a court-ordered arrangement that allows one spouse to receive a percentage of the other spouse’s pension. This percentage is transferred into a pension in the recipient’s name giving them independent control over it.
Pensions may not be immediately accessible but they often represent long-term financial security and can be among the largest assets in a marriage. This is particularly true in long marriages, where one partner has significantly higher earnings or has substantial workplace or private pensions and where their spouse sacrificed career opportunities and the ability to build up their own pension pot.
We begin by obtaining the Cash Equivalent Transfer Value (CETV) estimating the current value as if it were to be transferred today. However, CETVs can be misleading, particularly for defined benefit schemes, so expert advice is necessary, from a Pensions On Divorce Expert (PODE). The PODE report will assist the parties to negotiate an agreement to present to the court.
Whether agreement is reached or not, the court needs to decide how much the pension share is to be, taking into account each party’s financial needs, the length of the marriage, age, earning capacity and any other contributions to the relationship.
Each party ends up with their own pension, allowing both individuals to plan their retirement without relying on the other.
Pension sharing may not be straightforward. Different types of pensions, such as defined contribution and defined benefit schemes, require different approaches.
Pension sharing orders can take time to implement and delays may affect financial planning. There may also be administrative fees charged by pension providers.
Pension sharing itself is not usually taxable but the way benefits are drawn in the future can have tax consequences. Seeking professional advice from financial advisers and family law specialists is essential to avoid nasty surprises in the future.
Pension sharing is important, ensuring both parties can move forward with financial security.
If you would like to discuss pension sharing or any other aspect of financial settlement on divorce, ring me I’m here to help.
