Skip to main content

Pensions on Divorce: Protecting Your Future

Advice Around Pensions on Divorce

A guide to how pension assets are dealt with in financial remedy proceedings and the orders that the court can make.

To discuss a family law issue call 0113 320 5000

Often, pensions are one of the most significant assets of a marriage. However, due to their complexities and the deferred benefit they bring, they are often overlooked and not always factored into the terms of an overall financial settlement. It is, therefore, extremely important that early, expert advice is sought to ensure that they are considered when resolving the financial arrangements in the event of a divorce.

Pensions on Divorce - What is a Pension?

Put simply, a pension is a type of savings plan which produces an income in retirement. Pensions have specific rules and regulations around them, with specific tax rules, which can be complex.

There are two kinds of pension provision in the UK: the state pension and private pensions. The state pension is a payment made by the Government when an individual reaches state pension age. Currently in the UK. this is primarily based on national insurance contributions made by them throughout their working life.

A private pension is a savings plan that an individual or their employer sets up and contributes to throughout their working life. The main types of private pensions are defined contribution schemes and defined benefit schemes. The picture is further complicated by the fact that some schemes outside of the normal state pension are public sector schemes, such as those provided by the NHS, or local authorities.

It is important when considering the terms of an overall financial settlement to understand first and foremost the extent of both parties’ pension assets. Often, due to the passage of time, individuals are not always aware of the value of their total pension assets and therefore early disclosure of the parties’ pension assets is crucial.

Pensions on Divorce – What’s Taken Into Account?

Pensions are often one of the most significant assets of the marriage.

The Matrimonial Causes Act 1973 (MCA) is the leading legislation which governs how the court considers financial provision. It sets out the powers of the court to make financial orders on or after the conclusion of a marriage.  

Section 25 (2) of the MCA refers to the ‘financial resources’ which each of the parties to the marriage has. It is well accepted that a pension is a financial resource which the court will have regard to.

It’s important to understand both party’s pensions properly. That means each person must share full details of their pensions, including a recent statement showing how much the pension is worth. This is provided by the pension provider and is essential in sorting out the finances fairly during a divorce.

What types of Orders can the Court make in respect of pensions on divorce?

Pursuant to the MCA, the Court has the ability to make a number of orders in relation to Pensions including Pension Sharing and Pension Attachment Orders. In addition, the Court can also ‘offset’ pension assets against other assets such as property as part of an overall settlement.

Pension Sharing Orders

A Pension Sharing Order is an order of the Court which divides one party’s pension, allowing the other party to receive a portion of their pension in their own right. It separates one pension arrangement and creates two separate funds (or allows extraction of an element of the original pension into a new fund). The share remains a pension, however.

A Pension Attachment Order

A Pension Attachment Order (formerly known as a ‘Earmarking Order’) is an order which enables one party to receive a percentage of benefits paid from the other’s pension. Similar to a form of maintenance payment. The pension remains in the original owner’s name until they withdraw funds from the pension, at which point, part of the pension is redirected to the other party. Now that Pension Sharing Orders can be made this is very rare. Although there may be specific circumstances where it is appropriate. This is something which no one should be agreeing to without understanding the implications, however, and obtaining bespoke advice.

Pension Offsetting

Pension offsetting is the method in which one party retains their full pension assets and the other party receives an equivalent share of the other available assets, for example, property assets. It is another means of achieving a ‘clean break’ by compensating one party with assets of equivalent value to their share of the other’s pension. However, caution must be exercised, and expert advice is mandatory to ensure that such an arrangement is fair to both parties as often the true value of pensions is not obvious without expert advice.

What is a Pension on Divorce Expert?

A Pension on Divorce Expert (PODE) is a specialist, financial professional who can provide additional expert input on pension assets during divorce and they often work with lawyers and the Court to help individuals and the Court understand the true value and implications of a pension arrangement.

This may be required for a number of reasons but often a PODE is involved where the pension arrangement is particularly complex or there are a number of pension assets to be considered.

Contact our family law team to discuss pensions on divorce

Our team of family law experts are on hand to offer you the support and advice you need during this challenging time.

Call us on 0113 320 5000 or email @email.

FAQs

Yes, you can split pensions in the context of divorce proceedings and we can discuss the options available to you and assess what would be most suitable based upon the circumstances of your case.

Yes, this is called offsetting pensions and is referred to above. It is crucial that advice is sought if you are considering a pension offset and our expert team at Winston Solicitors can advise you about this.

An individual’s state pension will be considered when looking at their income. However, it is not usually possible for the State Pension to be the subject of a Pension Sharing Order, discussed above.

We can investigate and ascertain the true extent of a party’s pension arrangements using disclosure orders.

At Winston Solicitors, we specialise in helping clients across Leeds, Harrogate, and Yorkshire as well as nationally with divorce cases involving pensions

Speak to one of our family law experts

Our Leeds-based team is ready to help you navigate pensions in divorce with clarity, confidence and expertise.

Client feedback

Hannah at Winston helped me with filing the financial issues of my divorce to the court. She liaised with my ex husband as I was at a point I could no longer speak to him. I am very grateful to Winston’s and especially Hannah.
Anonymous
Was very satisfied with all the procedure of getting divorced was kept informed always through and explained all the legality in simple terms
Terry
Wendy Campbell who delt with my devorce was polite and understanding,very pefessional.I could not have ask for a better person to help me through the bad times. Always keeping me up to date with every thing and no problem she could not handle.
Andrew
My Divorce case was handled efficiently and with understanding by Teresa and Judith who guided me all the way through it with sympathy for the circumstances and I wouldn't hestitate to recommend them, infact I have already done so!
Elizabeth R
I have used Winstons for both family and Conveyancing and they have been 5* on both.I would highly recommend
Jacqueline
Review for Wendy – Family Law Services at Winston’s Solicitors, LeedsI recently had the pleasure of working with Wendy from Winston’s Solicitors in Leeds on a family law matter, and I cannot recommend her highly enough. From our first consultation, Wendy was incredibly professional, empathetic, and thorough in her approach. She took the time to fully understand my situation, providing clear and concise advice at every step of the process.Throughout the entire case, Wendy was always available to answer any questions I had, and she made sure I felt supported and informed. Her knowledge of family law is exceptional, and I felt confident in her ability to handle my case. She was transparent about all costs, keeping me informed of any developments along the way.What truly stood out to me was her attention to detail and her ability to navigate what was a very emotionally charged situation with sensitivity and care. Wendy was not only a skilled professional but also genuinely understanding of the emotional impact of my case, which made a huge difference during a stressful time.Thanks to Wendy’s hard work and dedication, I was able to reach a favorable outcome, and I am incredibly grateful for her support. If you are looking for a compassionate and experienced family law solicitor, I would wholeheartedly recommend Wendy at Winston’s Solicitors.
Natalie
Exceptional Service - Highly Recommended I recently engaged the services of Winston Solicitors and was thoroughly impressed by the professionalism, expertise, and dedication demonstrated by the Winston team: Harriet Reid and Emily Bell. From the outset, they provided clear guidance, timely communication, and a level of care that made a challenging process much more manageable. Their attention to detail, responsiveness, and commitment to achieving the best possible outcome were evident throughout. I felt fully supported and confident in their hands. I highly recommend Winston Solicitors to anyone seeking high-quality legal services. Thank you for your outstanding work!
Emmanuel
In my divorce I dealt with Teresa Davidson and Emily Bell. I found them both at all times to be professional, responsive and compassionate. Based on my experience I would not hesitate to recommend them for any divorce or family law related matter.
Mark
Contact Teresa