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Phil Thomas
Senior Technical Support Consultant

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Splitting a pension on divorce

Published  17 November 2025
   6 min read

A pension is often one of the largest assets in a marriage or civil partnership. When couples separate, deciding how to divide pension benefits is a crucial part of reaching a fair financial settlement. This guide explains the main options and what to consider when splitting pensions on divorce.

Key facts

  • There are 3 options available for dealing with pensions on divorce: offsetting, pension attachment orders (earmarking), and pension sharing orders. 
  • Pension sharing usually offers the most straightforward financial separation. 
  • Rules for pension sharing orders vary between Scotland and England & Wales. 

Options for splitting pensions 

Once pension assets have been identified and valued, together with their solicitors, divorcing couples must agree the overall financial settlement. Here are the three main approaches: 

 Offsetting 

Offsetting is the simplest method and offers a complete financial break. One party keeps their pension, while the other retains other assets—most commonly the family home. 

Pros: 

  • Clean break between ex-partners. 
  • Straightforward to implement. 

Cons: 

  • May not work if the pension is very large compared to other assets. 
  • Could require one party to give up most other assets. 

Pension attachment orders (earmarking) 

A pension attachment order is a court instruction requiring pension scheme trustees to pay benefits directly to an ex-spouse or civil partner. 

What can be attached: 

  • Tax-free cash (PCLS). 
  • Member’s pension income. 
  • Death-in-service lump sum. 

Drawbacks: 

  • No clean break—ongoing financial link remains. 
  • Payments only start when the member takes benefits, which they can delay. 
  • Tax complications if the member is a higher-rate taxpayer. 
  • Risk of lapsing on death or remarriage. 

Because of these issues, attachment orders are now rarely used.  

Pension sharing order 

Introduced in December 2000, pension sharing is now the most common approach after offsetting. It allows a clean break by splitting the pension into two separate pots. 

How it works: 

  • A percentage of the pension is legally transferred to the ex-partner. 
  • The receiving party can manage their share independently. 

Implementation options: 

There are three ways in which a sharing order may be implemented: 

  1. The ex-spouse/civil partner may be offered membership of the pension scheme. 
  2. The ex-spouse/civil partner may be offered a transfer to their own pension plan. 
  3. The trustees may choose to offer both options. 

Note: the trustees decide which implementation options are available at scheme level; individual members cannot choose between them.

Why valuation matters 

Whichever option is chosen, an accurate pension valuation is essential for a fair settlement. Solicitors often involve financial advisers once a sharing order is agreed, as specialist advice is needed to select the right pension plan for transferred benefits. 

Frequently asked questions

The pension is considered part of the matrimonial assets. It can be divided through offsetting, a pension attachment order, or a pension sharing order, depending on their circumstances. 

Yes, in some cases they can retain their pension, particularly if other assets (such as property) are used to offset its value. However, this depends on the overall financial settlement. 

A pension sharing order splits the pension into two separate pots, giving each party independent control over their share. It’s often the preferred option for a clean financial break. 

This court order directs pension scheme trustees to pay benefits to an ex-spouse or civil partner. It does not allow a full financial separation and can be complex to manage. 

Yes, pension sharing rules differ between Scotland and England & Wales. Always seek advice tailored to your jurisdiction. 

Some pension attachment orders may lapse on remarriage unless specifically worded to prevent this. Pension sharing orders are unaffected.

Disclaimer

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.