Global Site
Argentina Aruba Barbados Bolivia Brazil Canada Cayman Islands Chile Colombia Costa Rica Curacao Ecuador El Salvador Guatemala Honduras Mexico Panama Paraguay Peru Puerto Rico Saint Martin Suriname United States Uruguay Venezuela
Afghanistan Australia Cambodia China Hawaii Hong Kong India Indonesia Japan Macau Malaysia Maldives Mongolia Myanmar Nepal New Zealand Pakistan Philippines Singapore South Korea Sri Lanka Taiwan Thailand Vietnam
Albania Andorra Armenia Austria Azerbaijan Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Hungary Ireland Italy Kazakhstan Kosovo Latvia Liechtenstein Lithuania Luxembourg Malta Moldova Netherlands Norway Poland Portugal Romania Serbia Slovakia Slovenia Spain Sweden Switzerland Tajikistan Turkey Ukraine United Kingdom Uzbekistan
Algeria Angola Bahrain Côte d’Ivoire Egypt Ghana Iraq Israel Jordan Kenya Kuwait Lebanon Liberia Mauritius Morocco Mozambique Nigeria Oman Qatar Saudi Arabia Senegal Sierra Leone South Africa Syria Tanzania Togo Tunisia Uganda United Arab Emirates Yemen
Contact Us
home Services Divorce and separation services
Group of people in a meeting

Pensions on divorce

Understanding the key ways pensions can be divided in divorce, and why the right approach matters.
Get in touch

Author: Laura Clark

Pensions can play a critical role in divorce settlements, but only when the available options are clearly understood.

When it comes to divorce, there is no one-size-fits-all approach, but there are key considerations when it comes to the division of assets. Pensions, in particular, are often one of the largest assets involved, yet they can also be among the most complex.

Understanding how pensions can be treated within proceedings and the wider financial planning implications of these options is important when working towards a fair and well-informed settlement.

Offsetting

Offsetting involves balancing the value of pension assets against other marital assets, such as property or savings. For example, one party may retain a larger share of the family home while the other keeps more (or all) of the pension.

Advantages

  • Provides a clean financial break with no ongoing ties between parties once the settlement is agreed.
  • Can be simpler and quicker to administer compared to other methods.
  • Offers greater flexibility in how the overall asset division is structured, allowing settlements to reflect the parties' individual priorities and circumstances.

Disadvantages

  • Requires accurate valuation of pension benefits, which can be complex, especially for defined benefit schemes.
  • The ‘paper value’ of a pension (Cash Equivalent Transfer Value (CETV) may not reflect its true long-term value.
  • Risk of inequity if tax implications and future income needs are not properly assessed.

Earmarking

Earmarking (also known as pension attachment) involves directing a portion of future pension benefits, typically income or lump sums, to the ex-spouse when the pension is eventually drawn.

Advantages

  • Allows continued sharing of pension income without immediately splitting the fund.
  • Can be suitable where immediate liquidity is limited or unavailable.
  • Provides a way to preserve the pension intact until retirement, rather than requiring an immediate transfer or restructuring of pension rights.

Disadvantages

  • Maintains financial dependency between former spouses.
  • Payments cease on the death of the pension holder (in most cases).
  • May also cease if the recipient remarries (depending on the order).
  • The receiving party has no control over when benefits are taken.

Pension sharing

Pension sharing involves splitting pensions at the point of divorce via a pension sharing order. A percentage of one party’s pension is transferred into a new pension in the other party’s name.

Advantages

  • Achieves a clean break, with each party having independent pension provision.
  • Provides certainty and control over retirement planning.
  • An approach that many practitioners and courts have increasingly considered where pension assets are significant.

Disadvantages

  • Implementation costs and potential administrative complexity when establishing pension sharing arrangements.
  • Different pension schemes may offer varying transfer values and benefits, which can affect outcomes.
  • Requires careful analysis to ensure fairness across schemes.

Pension schemes are often more complex than they first appear, and that complexity can significantly influence the division options available. Careful analysis, combined with clear, holistic planning, is essential.

Where professional financial advice is sought, fees will apply and will vary depending on the complexity of the individual case. Any advice will be based on personal circumstances, and as with all financial planning, outcomes will depend on a range of factors that cannot always be predicted or guaranteed.

Divorce, Dissolution and Separation support
Regain control of your financial future after separation.
Find out more

Meet our Crowe Financial Planning team

Our team
Our Financial Planning teams are based across our offices in Cheltenham, Kent, London, Manchester, Midlands and Thames Valley.

Get in touch

Call, email, sign up for our newsletter, or complete our contact us form to arrange a confidential consultation.  

call_end_24px  email_24px   chat_24px   contacts_24px

Disclaimer

Crowe Financial Planning UK Limited is authorised and regulated by the Financial Conduct Authority (FCA) to provide independent financial advice (FRN 185323).

This insight is approved for use by Crowe Financial Planning UK Limited on the date issued. The information on this page is for information purposes only, based on our understanding of legislation and market practice at the time of writing. It does not constitute financial, legal or tax advice, and appropriate professional advice should be sought before any course of action is pursued.

Where professional financial advice is sought, fees will apply and will vary depending on the complexity of the individual case. Any advice will be based on personal circumstances, and as with all financial planning, outcomes will depend on a range of factors that cannot always be predicted or guaranteed.

The value of investments can go down as well as up and is not guaranteed; investors may not get back the amount originally invested. Past performance is not a guide to future performance.

Tax treatment depends on individual circumstances and is subject to change. The FCA does not regulate Trusts, Tax or Estate Planning. The division of pension assets on divorce involves both financial and legal considerations, independent legal advice should be sought alongside any financial planning guidance.

Please be aware that clicking links to third-party websites will take you away from the Crowe Financial Planning website. We are not responsible for the accuracy of information contained within linked sites.