Pensions in divorce must never be ignored

When couples split their assets when they divorce, most will focus on the family home, savings and debts. 

But pensions in divorce are often the second most valuable asset, yet they are routinely overlooked or misunderstood during settlement negotiations. 

This oversight can lead to serious financial inequality and hardship for one party, especially for women who tend to have lower pension savings due to career breaks or part-time working.

Johanna Brewer, head of Family Law at Wake Smith Solicitors looks at the issue.

This article covers:

• The scale of the problem
• Why pensions are so important in divorce settlements
• How to deal with pensions in divorce
• Don’t ignore pensions in divorce
• Your next move?

The scale of the problem

Despite pensions often representing a major portion of household wealth, only about 12% of UK divorce settlements include pension sharing orders. This leaves the vast majority without formal pension division.  More worryingly, 71% of divorce settlements don’t factor in pension assets at all.

Research shows that in roughly half of couples, one partner (usually the husband) holds 90% of the combined pension wealth, and fewer than 15% have roughly equal pensions.

If pensions are ignored, women could lose out on around £79,000 in retirement savings.

Some analysts suggest excluding a pension from a divorce settlement could cost a spouse anywhere between £196,000 and £665,000 over time, thanks to compound growth.

These figures underscore the importance of giving pensions in divorce the attention they demand.

Why pensions are so important in divorce settlements

There are three key reasons why pensions are so important in divorce settlements:

1. They are often extremely valuable

Beyond the family home, a pension is typically the largest single financial asset a couple holds.   As pensions grow over decades and benefit from tax-efficient investing, their eventual value can far exceed most other savings.

2. Pensions provide future income, not just a lump sum

Unlike cash savings that can be spent quickly, pensions are designed to deliver continual income in retirement.  If you forgo your pension entitlement in a divorce settlement, you aren’t just giving up a number on paper, you are actually giving up decades of future retirement income.

3. Ignoring pensions exacerbates the gender pension gap

Divorced women often emerge from separation with much smaller retirement resources compared to men.  UK research shows that divorced women’s pension assets are around 39% of those held by divorced men.  This gap matters because women tend to live longer than men, meaning their pension income must stretch further and because many women take career breaks to raise children or care for family which reduces their own pension contributions.

If pensions aren’t shared properly in a divorce, these inequalities will significantly impact that parties retirement income.

How to deal with pensions in divorce

Effectively managing pensions in divorce requires a mix of legal steps and financial planning.

Each party must fully disclose all their pension assets. In England and Wales, private, workplace and overseas pensions are all considered part of the matrimonial pot and must be disclosed. This disclosure should include:

• The pension’s current value (usually via a Cash Equivalent Transfer Value)
• The type of scheme (defined contribution vs defined benefit)
• Projected retirement benefits

Failing to disclose pension value at the outset can lead to court applications to revisit or revise financial settlements.

The methods of division must then be considered.  Typically, there are three ways pensions in divorce can be dealt with:

• Pension Sharing Order, the preferred approach, where the pension pot is split fairly between the parties.
• Pension Attachment Order, one party receives income from the other’s pension when it starts to pay out.
• Offsetting, using other marital assets (like property) to compensate for the pension’s value.

Each method has pros and cons, and the correct choice often depends on the values of all the marital assets and the parties’ ages and retirement needs.

Use someone who specialises in valuing pensions to provide an independent assessment of the pension’s value. Pension valuation is complex, especially with defined benefit schemes. An actuary or pension specialist can provide accurate figures that go beyond the headline transfer value. Without professional valuation, you risk under-estimating or over-estimating the pension’s worth and this is the reason courts sometimes reject financial settlement proposals.

Family courts in the UK are obligated to ensure that financial settlements are fair, equitable and fully informed.  When parties submit financial consent orders or settlement proposals that fail to include pensions in divorce negotiations, courts may refuse to approve them on several grounds:

1. Lack of full financial disclosure

If pensions are not disclosed accurately, the court cannot assess whether a settlement is fair and will typically ask for updated documentation or refuse the order until pension details are included.

2. Undervaluation of long-term value

Courts recognise that pensions have long-term income implications, not just immediate transfer values. If the pension’s future income potential isn’t properly accounted for, the court may reject the settlement.

3. Risk of inequality

A settlement that overlooks pensions can leave one spouse without adequate resources in retirement.  The court is legally obligated to prevent this. In practice this means the court will not rubber-stamp a deal that leaves a spouse financially insecure if a senior pension asset could have been shared.

Don’t ignore pensions in divorce

When negotiating a divorce settlement, pensions must be treated with the same care and attention as your home or savings. 

Failing to consider pensions can cost you hundreds of thousands of pounds over a lifetime in lost retirement income, deepen financial inequality after divorce, especially for women and even lead to the court rejecting proposed settlement terms due to incomplete financial disclosure or unfair divisions.

Your next move?

You must be prepared to fully disclose and value all pension assets. Seek an expert opinion as well as legal advice and ensure all the proper orders are in place to support the division of the pension assets. 

Considering pensions in divorce isn’t just good practice, it’s essential for securing your future financial wellbeing.

If you are considering divorce and recognise pensions will likely be included in the settlement, please contact our experienced family team today.

To arrange a confidential initial consultation with one of our team, call 0114 266 6660 or click here to contact us online.

For further information on our family law services click here

Published 10/03/2026