By Henry Hood, Senior Partner, Hunters Law LLP
A wide-ranging research project by the Nuffield Foundation, Fair Shares, found that a quarter of divorcees did not know whether their former spouse had a pension. A similar proportion of divorcees with a pension did not know what type of pension they had. At the point of separation, focus is typically on immediate financial concerns such as securing suitable housing and meeting day-to-day costs. Pension provision can seem distant and abstract.
However, for many couples, pensions are their most valuable asset alongside the family home. As pensions cannot be held jointly and are often concentrated in one party’s name, they are vulnerable to being excluded from a fair overall settlement. Absent professional advice or court oversight, they are easily missed. Whilst a couple may consciously choose not to include pension assets in their financial settlement, it is important that they do so with a full understanding of their value and the available options.
Yet the Fair Shares report identified “a considerable level of ignorance about pensions in general, and about the possibility of sharing them on divorce in particular, among divorcees”. In fact, there are in fact three mechanisms through which pension assets can be addressed on divorce: pension sharing orders, pension attachment orders and offsetting.
A pension sharing order transfers a specified percentage of one party’s pension rights into a separate pension arrangement in the name of the other. A court order is required; pension providers have no power to divide pension rights without one. Often, the appropriate course will be for the parties’ pension assets to be shared equally, and in such cases consideration must be given as to whether this should be by reference to the pensions’ cash equivalent value, or to their likely income production on retirement. Where a significant proportion of a pension was accrued before the relationship began, this may justify departure from equality. The division may also be adjusted to meet one party’s retirement needs, particularly where the parties are closer to retirement with limited opportunity to build further pension provision.
A pension attachment order requires the pension provider to pay a percentage of the pension benefits, when they come into payment, directly to the pension-holder’s former spouse. However, since the introduction of pension sharing orders in 2000, pension attachment orders are rare as pension sharing provides greater certainty and autonomy for the recipient.
Offsetting involves balancing the value of pension assets against the value of other assets, typically property. It is often used in cases with limited assets, with the homemaker retaining the family home and the breadwinner retaining their pension. Whilst offsetting does not require a court order, it often, particularly where defined benefit schemes feature, requires input from a Pensions on Divorce Expert, typically an actuary, to advise on the appropriate offsetting value.
The prevailing view in the Family Court is that offsetting should be avoided where possible given the inherent difficulty in comparing pension assets with the value of other assets. The Guide to the Treatment of Pensions on Divorce advises that parties "try, if possible, to deal with each asset class in isolation and avoid offsetting - a discrete solution which equalises pensions by pension sharing orders and which equalises non-pension assets by lump sum or property adjustment orders".
However, the Fair Shares research found that pension sharing orders were made in only 11% of cases in which one or both spouses had a pension which was not yet in payment. The researchers concluded that the “lack of awareness, understanding or interest in pensions amongst many divorcees… fed through into how far they had dealt with pensions in making their financial arrangements”.
Recent Family Court statistics reinforce this concern. In 2024, there were 111,227 applications for divorce but only 45,563 financial applications. On a simple comparison, no financial application was made in approximately 59% per cent of cases. Whilst the comparison is imperfect as financial applications need not be made at the same time as the divorce application, the disparity indicates that a substantial proportion of divorcing couples do not engage with the financial remedy system.
The absence of a financial application does not necessarily mean that pensions were ignored, just as the presence of a financial order does not guarantee that pensions were properly addressed. Some parties will have no private pension provision, estimated by Fair Shares to be around 30% of cases. Others may include pensions informally through offsetting. Nevertheless, the lack of court involvement removes the possibility of pension sharing and significantly increases the risk of unfair outcomes.
Encouragingly, the 2025 figures provide modest grounds for optimism. Whilst divorce applications fell slightly to 109,817, financial applications increased to 49,067. On that basis, the proportion of cases in which no financial application was made reduced to 55 per cent.
These figures suggest growing engagement with the financial remedy process, but they also underline the scale of the remaining challenge. Pensions remain uniquely at risk on divorce: complex, deferred, and easily overlooked, yet often among the most valuable assets a couple owns. The data reinforces the importance of specialist legal and actuarial input to ensure fair treatment of pensions on divorce.
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