1 in 2 people don’t know pensions can be included in a divorce settlement

man and woman signing agreements

You may have seen the recent news that the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum, has been ordered to pay his ex-wife and two children a record-breaking amount as part of their divorce settlement.

While your clients may not be writing a cheque for £500 million as part of their separation, an equitable division of assets is likely to be high on their agenda.

Solicitors often see a spike in divorce enquiries in January, with clients frequently more concerned with dividing property and savings than splitting their pensions – despite these often being one of the biggest assets in any settlement.

Clients need to remember that pensions are joint assets

Our experience tells us that many people still don’t know that a pension is considered a joint asset in a marriage, even if only one spouse has built it up.

Often, when it comes to dividing assets, women are more focused on the marital property, particularly if children are still living at home.

While this might seem like an advantageous split, when it comes to retirement income, the partner who took the property rather than the pension has no income to live on, even though they have a house to live in.

The person taking the property might end up having to sell the house to generate the income they need when they retire.

So, it’s important that both parties consider any pension assets, and that these are distributed fairly in the event of a split.

Have a client who needs pension advice on divorce? We can help

To help you give the best advice to clients, watch the series of informative and useful pension and divorce webinars on our website.

From how to get a pension sharing report quickly, to how pension sharing can affect a client’s Lifetime Allowance, these webinars will help you to understand a client’s options.

We can also provide training and assistance if you’re a solicitor in this field – please email info@blueskyifas.co.uk or call us on 0118 987 6655 to find out more.

Always remind clients to discuss pensions

Last year, we shared some of the key findings of the 2021 Great British Retirement Survey – a study of more than 10,000 people and their attitudes to later life.

One worrying outcome was that almost half (49%) of divorced respondents admitted to not discussing pensions during their divorce proceedings.

On top of this, the Independent reports that more than half (52%) of women do not know their rights or are unsure of them when it comes to divorce and their partner’s pension.

Almost one in two either wouldn’t know what to do when it came to dividing pensions when they separate or hadn’t considered that their and their partner’s pensions could be included in a divorce settlement.

Pensions can often be the biggest asset in a divorce – more valuable even than the family home – and so it could be vital to your client’s later-life security that they consider splitting a pension.

There are three main ways that pensions can be split.


Here, the value of any pension is offset against the other assets. In very simple terms, if a couple had a property worth £300,000 and a pension worth £300,000, one might choose to keep the pension with the other keeping the property.

There can be downsides to this approach. Owning a property may require the party to sell to generate an income in later life, and there may be significant costs for maintaining a property (unlike a pension, where fees are generally low).

There are also significant tax benefits in owning a pension. Clients receive tax relief on contributions and a pension will typically fall outside a client’s estate for Inheritance Tax purposes, unlike a property.

Watch our useful pension offsetting webinar to learn more.


Sometimes called a “pensions attachment order”, earmarking works by allowing the partner without the pension to receive income or a lump sum from it in the future.

Here, the pension benefits are “earmarked” for the benefit of one party in years to come. A court can also order that some or all of any survivor pension and lump sum death benefits must be paid to the other partner if the pension scheme member dies.

The disadvantage of this approach is that the party without the pension must wait until their ex-spouse retires or dies before they receive benefits. Additionally, the recipient of the “earmarked” benefits will have no control over the investment decisions their ex-partner takes.

Pension sharing

Under pension sharing pension benefits are split, and a share of the savings is transferred into the receiving partner’s name.

This ensures a clean break as, on divorce, both parties know what proportion of the pension they will receive or keep.

Despite this being the preferred option for many professionals, just 12% of divorces result in any pension sharing.

Watch our informative guide to pension sharing and learn some useful tips.

Get in touch

If you have clients with pension assets who would like advice on how to divide their wealth, we can provide independent and impartial advice. We can also provide Pension Sharing Reports for your clients.

Watch our webinar series to learn more about pensions and divorce.

To find out more, or how you can work more closely with BlueSKY, please email info@blueskyifas.co.uk or call us on 0118 987 6655.