How are pensions split in UK divorce?

Pension assets can be some of the largest financial assets a person has and therefore can form a big chunk of the marital pot. In fact, The Times Money Mentor found that pensions make up 42% of a household’s net worth after property, but only 15% of couples have equal pots. As such, divorce law is designed in a way to help the person with the smaller pot. 

Usually, pensions are split between the two parties in the divorce just like how property or other investments are split. However, the starting point is to divide a pension 50/50 between the couple. 

When splitting pensions, there are a few ways that it could be done. You could have a “clean break” by deciding how to split the pension through mediation in a negotiated settlement, or you could get a pension attachment order which obligates you to give part of your pension to the other person. 

The judge will try to achieve a fair and equal split when considering a pension in a divorce settlement. However, the balance may tip in favour of one party over another such as a 60/40 split for instance. 

The court will assess a few different factors (detailed in the Matrimonial Causes Act 1973) to decide the best outcome. It will consider how the needs of any children should be met. For instance, one parent may need more money to support the children. Each party’s financial needs and responsibilities will also be taken into account including their earning potential, health issues or any other children involved. 

The court will also consider the contributions each party made to the marriage and how long it lasted. They will look at things like whether one person supported the family through their earnings or whether another raised the children. Assets owned by each individual will also be looked at to decide whether the value of the pensions can be offset against any other assets.

One of the options that is available during a divorce is pension sharing. The court splits the pension straight away which means the couple will have a clean break once the divorce is finalised. The court will issue a pension sharing order which will split the pension into two, each party will have a percentage of the pension which will be decided based on the factors mentioned above. This can be taken either as a lump sum or it can be put into the other person’s pension pot. It’s important to note that state pensions cannot be shared. 

Also known as an “earmarking order”, it gives the court power to provide all or a fraction of someone’s pension to the ex-spouse. The pension owner will still have the pension in their name, but a portion of it will be “earmarked.” This means that parties won’t get a clean break after the divorce is finalised because one person will make pension contributions to the other. This doesn’t include a state pension.

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