Financial Settlements on Divorce in England and Wales

When a marriage or civil partnership ends in England and Wales, the money, property and pensions built up during it all fall to be divided as part of the financial settlement. Pensions are often the second largest asset after the family home, and sometimes the largest, yet they are frequently left out of the deal. Research published by the Money and Pensions Service in January 2026 found that only four in ten adults (43%) know that a pension forms part of a divorce settlement, with awareness slightly higher among men (44%) than women (41%)¹. Parliament's own research library notes that pensions are often not considered during divorce².

Claiming a share of a former partner's pension is not an aggressive move. As the guidance charity Advicenow puts it, the person who makes a claim against their ex's pension "is not doing anything wrong, it is their legal right to ask the court to consider the pensions in the case when it comes to a financial settlement on divorce"³. Pensions can only be held in one person's name, but on divorce any and all pensions need to be taken into account and can be shared if that is the only way to reach a fair outcome³.

The risk of doing nothing is real. Research by LCP found that only around a third of divorces have any kind of financial order attached to them⁴, and a divorce on its own does not cut the financial tie: a divorce only ends the marriage, it does not end the financial connection between ex-partners, so a former spouse can potentially make a claim years later⁵. This page explains the three ways a pension can be dealt with in a settlement in England and Wales, how each one works, what it costs and where to get help. For the wider picture, see separating or divorcing: a money checklist, and for Scotland's different rules, dividing money and property on divorce in Scotland.

Pensions in a divorce settlement: three ways to deal with them

There are three routes a court can take with a pension, and a couple agreeing a settlement between themselves can choose any of them. A pension sharing order transfers part of one person's pension to the other, so that both end up with their own pension in their own name⁷. Pension offsetting leaves each person with their own pension, but the one with the lower pension receives a larger share of other assets, such as equity in the property or a lump sum, to balance things out⁷. A pension attachment order, sometimes called earmarking, directs that a percentage of one partner's pension benefits is paid to the other person at the point an income is taken from the pension⁷.

Which route fits a particular case depends on the facts. The bigger the pension pot, the more likely it is that a pension sharing order will be a fairer outcome overall, especially if any of the pensions are defined benefit pensions, such as a final salary scheme⁶. Attachment orders are very rarely made nowadays⁶. Where pensions are large or the scheme rules are complex, the court may ask a pensions on divorce expert, often an actuary or a highly qualified financial professional, to value all the pensions and suggest a fair division⁷.

Not every pension can be shared. The basic State Pension cannot be shared on divorce, but the Additional State Pension and the Protected Payment element of the new State Pension can be, with a court order⁶. Workplace and personal pensions are all capable of being shared. The Money and Pensions Service runs a pensions and divorce appointment service that can explain the pension options available during a divorce or dissolution¹, and it is free.

Pension offsetting: trading pension value for other assets

Pension offsetting means the value of the pension is offset against other assets¹⁰. Each party retains their own pension, but the spouse with the lower pension receives a share of other assets instead, for example a greater share of the equity in the family home or a lump sum of cash⁷. A common arrangement is one person keeping the family home in return for the other keeping their pension untouched¹⁰.

The attraction is simplicity and a clean break now. There is no need to involve pension schemes, no implementation period and no waiting for the pension to be payable: the person who wants the house gets the house, the person who wants the pension keeps the pension, and the two finances are separated immediately. For couples whose pensions are similar in size, or where the pension is small relative to the other assets, this can be a proportionate way to settle.

The difficulty is comparing unlike things. A pension is not cash in the bank: it is a promise of income decades away, taxed when drawn, and often worth more than the family home³. Valuing pensions can be very tricky, and Advicenow warns that you might need help to understand the values of the pensions in your case³. If the cash equivalent valuations for all your and your ex's pensions add up to more than £100,000, particularly if any are defined benefit pensions, independent guidance recommends getting expert help before agreeing an offset⁶. The Pensions on Divorce Expert (PODE) route exists precisely for this: an actuary values the pensions and suggests a fair division⁷.

Where pension offsetting can leave you short in retirement

Offsetting can look fair on the day and turn out badly decades later, and this risk falls most often on the person who takes the house and gives up the pension claim. A house cannot be eaten in retirement. It provides somewhere to live, but it does not provide an income, and the pension income given up is the very thing that would have supported the later years.

The state pension only partly fills the gap, and it is not guaranteed. Turn2us notes that women who divorced after reaching pension age are among the groups affected by DWP pension underpayments, cases where people did not receive the state pension they were entitled to¹¹. Someone who has given up a private pension share and then receives less state pension than expected can find the offset was based on a false picture.

The timing of retirement also changes what a pension is worth. If you retire before your normal pension age and claim early, additional pension benefits are reduced for early payment, and monthly instalment benefits may be reduced further because you will not have completed your expected contract¹². An offset agreed on the assumption of a full pension at normal pension age can therefore overvalue what the pension holder keeps, or undervalue what the other person has given up.

Policy work on pension uprating points the same direction: even where headline entitlements rise, there can be small offsetting savings elsewhere, for example in reduced entitlement to Pension Credit¹³. The practical lesson is that an offset should be stress-tested against the worst case, not the best one, and that is what a pensions on divorce expert is for⁷. Someone who has already given up a pension share can still act later in life: there are legitimate ways to boost a pension, and the normal minimum pension age rising to 57 on 6 April 2028 sets the earliest point most people can draw on what they build⁹.

Pension sharing order: the most common way to split a pension

A pension sharing order is where part of one person's pension is transferred to the other, so that both parties have their own pension⁷. It is the most common way of dividing pensions in divorce⁷. The court sets a percentage, the scheme carves that percentage out of the member's pension, and the receiving spouse ends up holding it in their own name, as their own pension.

The clean break is the point. Once the order is implemented, the two pensions are legally separate: the receiving spouse's share is no longer affected by the former partner's choices, health or lifespan, and the former partner has no continuing claim on it. A pension sharing order does not mean you will have to maintain any contact with your ex-partner¹⁰, which matters especially for anyone leaving an abusive relationship, where ongoing financial ties can be used as a means of control.

What the receiving spouse ends up holding depends on the scheme. In some schemes the former partner becomes what is known as a credit member: their share remains within the scheme and cannot be transferred out, and they cannot add to its value through transfers in or purchasing additional benefits¹⁴. In others, the share can be moved to a different arrangement. The member whose pension was shared cannot replace the specific benefits given to the former spouse, though they can buy additional pension within the normal scheme rules¹⁴.

A pension in payment can also be shared, with a caveat: if your share of your ex-spouse's pension comes from benefits they are already receiving as income, you will not be able to take a tax-free lump sum from it when you retire⁷. And a sharing order does not freeze the member's other rights: they can still transfer their remaining pension, though their benefits will be reduced to take account of the sharing order, and a copy of the order goes to the new provider¹⁴.

How a pension sharing order is carried out: four months to implement

A sharing order is not instant. The scheme has to be sent the right documents and, in most schemes, an administration charge before the clock starts. The Scottish Public Pensions Agency (SPPA), which administers the NHS and Teachers' schemes in Scotland, illustrates the standard sequence: it must be provided with a copy of the Extract Decree or Dissolution Order, the Pension Sharing Order including the information required by the Pensions on Divorce (Provision of Information) Regulations 2000 Section 5, and payment of the administration charges for implementing the order¹⁴. The SPPA then has four months from the date the documents and charge are received to implement the order⁸.

Before any of that, the pension has to be valued. The SPPA's process for calculating a cash equivalent transfer value (CETV) can take up to three months to complete, because it depends on third parties such as employers and HMRC⁸. The information required under Section 5 of the Regulations must reach the SPPA within two months of the date of the Divorce Decree or Dissolution Order⁸. Members of public service schemes affected by the 2015 remedy should also note that for sharing arrangements on or after 1 October 2023, two CETVs are calculated, one on legacy scheme benefits and one on reformed scheme benefits, and the higher value is used as the basis for the arrangement¹⁵.

If something goes wrong with the scheme's handling, there is a set path. Pension schemes operate an internal dispute resolution procedure, and in a two-stage procedure the scheme must reach a first stage decision within four months of receiving the application, a second stage decision within four months of the referral, and notify applicants of the decision no later than 21 days from when it is made¹⁷. The scheme must also tell complainants about the Money and Pensions Service and the Pensions Ombudsman at certain stages of the dispute¹⁷, and concerns about a workplace pension can be raised with the scheme or with The Pensions Regulator¹⁸. The Pensions Ombudsman's most common new complaint topics are contributions, retirement benefits and calculation of benefits¹⁹, which is a fair map of where pension administration most often goes wrong.

Pension attachment order: payments only when your ex draws their pension

An attachment order, also called earmarking, works differently: the pension stays in the owner's name, and a percentage of the pension they get, each week or month, is paid directly to their ex, or a percentage of the ex's pension is paid to them⁶. The same percentage of any tax-free lump sum or death in service benefits is also paid⁶. Nothing moves until the pension owner actually starts drawing their pension, because a share of the benefits is paid to the other person at the point an income is taken⁷.

That delay is the defining feature, and it cuts both ways. The receiving spouse may wait years, or decades, for the first payment, and in the meantime has no pension of their own from the arrangement. The pension owner keeps control of the asset, including when to draw it, subject to the normal minimum pension age, which rises from 55 to 57 on 6 April 2028⁹. An attachment order can also cover lump sums, which means the receiving spouse may get a payment when the owner takes their tax-free lump sum, even if the regular income has not yet started⁶.

Attachment orders are very rarely made nowadays⁶, largely because of their fragility, covered in the next section. They can still suit specific situations, for example where the pension owner is close to retirement and the payments will start soon, or where a sharing order is not workable. Either person can ask the court to change the amount of the order at a later date⁶, which gives flexibility a sharing order does not have, but also leaves the arrangement open to being revisited.

What ends a pension attachment order: death, remarriage and early retirement

An attachment order is conditional, and the conditions can end it. Pension payments end when the person who owns the pension dies, or if the person receiving the pension payments remarries⁶. Payments also cease on the death of the former spouse who was due to receive them⁷. In SPPA schemes, if the former spouse or civil partner dies before the member retires, the earmarking order ceases to apply altogether⁸.

The pension owner's choices can end it too. Because payments only start when an income is taken, an owner who retires early on a reduced pension reduces what the other side receives, and early payment reduces additional pension benefits and can cut monthly instalments further¹². The rise in the minimum pension age to 57 on 6 April 2028 can also push back the date the owner is able to draw the pension, delaying the first payment to the receiving spouse⁹.

If the pension owner dies, the receiving spouse's attachment payments stop, but other support may exist. Most defined benefit schemes continue to pay a portion of the pension income to dependents after death, usually stopping when the partner dies and any children reach a certain age, often 18 or 23 if still in education²⁰. Members can usually nominate someone, such as a spouse, family member or friend, to receive the pension pot if they die before scheme pension age, chosen in writing and changeable later²⁰. Under the Armed Forces Pension Scheme 05, a spouse or partner of someone who dies after leaving service and before the pension comes into payment receives a pension for life worth 62.5% of the deferred pension, plus the deferred pension lump sum²¹. Where a scheme has transferred into the Pension Protection Fund, arrears due up to the date of a member's death are still payable, and survivors receiving compensation receive increases to their payments²². Separately, a Bereavement Support Payment may be available, and if a partner died before 6 April 2017, Widowed Parents Allowance may be claimable instead²³.

Sharing, offsetting or attachment: how each one compares

The comparison comes down to certainty against immediacy. Sharing gives certainty but takes months to implement and may need expert valuation⁷. Offsetting gives immediacy but asks you to judge the trade between a house today and an income decades away, a judgement that is hard to get right without actuarial help where pensions exceed £100,000⁶. Attachment gives neither, and survives only while the conditions hold⁶.

Whichever route is chosen, the wider financial untangling still has to happen. Six in ten divorcees incurred legal or mediation costs when sorting out their finances when they divorced, one in six spent between £1,000 and £2,999, and one in eleven incurred costs of £10,000 or more, with higher costs associated with more assets²⁶. An Experian survey found 47% of people who ended a long-term relationship did not know what to do to financially split from their ex²⁷. Joint accounts, mortgages and credit need separating in their own right, and a financial association with an ex can affect your credit record: where a couple is no longer together but still share a joint mortgage, it may be possible to break the association after six months, but only once all other shared financial products, such as joint bank accounts, have been closed²⁶. The steps are set out in separating joint accounts, mortgages and debts, and the choice between a consent order or separation agreement and between mediation or court has its own pages.

Costs, tax and valuing a pension in a settlement

The first cost is valuation. A CETV is the standard measure of a pension's value for divorce purposes, and obtaining one can take up to three months in schemes such as the SPPA's⁸. Valuing pensions can be very tricky, and they can be worth more than the family home³. Where combined valuations exceed £100,000, expert help is recommended⁶, and the court may appoint a pensions on divorce expert to value the pensions and suggest a fair division⁷. Professional advice is not cheap: Which? research found that consolidating three pension pots totalling £500,000 with ongoing advice cost £27,705 over five years (£8,552 upfront and £19,153 ongoing)²⁸, a scale of cost worth knowing before committing to a complex settlement.

The second cost is implementation. Schemes charge an administration fee for implementing a sharing order, which must be paid before the four-month implementation period begins¹⁴. Legal and mediation costs are the third: as above, most divorcees incur them, and one in eleven pay £10,000 or more²⁶. Some providers also charge exit fees for transferring pensions out, which can cancel out the benefits of moving a share to a new scheme²⁹, and lost pensions can be traced through pension tracing services if old schemes have gone missing²⁹.

Tax shapes what a settlement is worth in several ways:

• Pension income is taxed. When you get money from a pension you pay tax on any income above your tax-free personal allowance³⁰, and payments under an attachment order are no exception.
• Money paid into a pension usually attracts tax relief³². For a higher-rate taxpayer earning £60,000, a £10,000 pension contribution has a net cost of £6,000 once relief at both rates is claimed³³, which affects how a pension's value compares with other assets.
• A share of a pension already in payment cannot produce a tax-free lump sum for the receiver⁷.
• On death, payments to a spouse or civil partner from a defined benefit scheme, known as a dependants' scheme pension, will not be subject to inheritance tax, even after the April 2027 rule change; but where someone aged 75 or over dies with a defined contribution pension, beneficiaries normally pay income tax when they withdraw money from it³⁴.

Once a share is received, the question becomes what to do with it. Transfers are not always possible: you might not be able to transfer if you have a share of an ex-partner's pension following a divorce, or a scheme with special features or guarantees like a Guaranteed Minimum Pension³⁵. The transfer process itself runs through set steps: check the current scheme allows transfers out, make sure no benefits are lost, decide which scheme to transfer into, check whether paid financial advice is needed, ask the current provider for a transfer value, and ask the new scheme to start the transfer³⁶. The Financial Conduct Authority sets out its own guidance on defined contribution pension transfers³⁶. Consolidating pots can reduce charges, Which? gives an example where transferring a pot with a 0.75% charge to one charging 0.25% produced a total pension value of £441,792 after 20 years³⁷, but exit fees and lost guarantees can outweigh the saving²⁹.