Going through a divorce is one of the most emotionally and financially challenging experiences a person can face. There is so much to think about — the family home, the children, day-to-day finances — that it’s easy for one of your most valuable assets to slip through the net entirely.
That asset is your pension.
In my work as an independent financial adviser, I support a lot of clients through the financial side of divorce. And time and again, I see the same thing: pensions are either overlooked completely, or undervalued because they feel complicated and far away. But here’s the truth — your pension could be worth more than your home. And walking away from divorce without properly addressing it could cost you tens of thousands of pounds in retirement.
I want to change that. So let’s talk about what you need to know.
Why Pensions Are So Often Missed
When couples separate, the focus tends to fall on the most visible assets — the house, savings accounts, cars. These feel immediate and tangible. A pension, on the other hand, sits in the background. You can’t see it or touch it, and for many people, retirement still feels a long way off.
But pensions accumulated during a marriage are matrimonial assets, just like everything else. In England and Wales, the courts take a starting point of equal sharing of all matrimonial assets — and that includes pensions built up during the marriage.
The problem is that unless you or your solicitor specifically raise it, pensions can simply be left off the table. And if you reach a financial settlement without properly accounting for them, it may be very difficult — or even impossible — to revisit later.
The Pension Gap Is Real
There is another reason this matters so much, particularly for women.
On average, women retire with significantly smaller pension pots than men. This is partly because women are more likely to have taken career breaks or reduced their hours to raise children, and partly because lower average salaries mean lower contributions over time.
If your spouse has been the higher earner — or if they have a defined benefit (final salary) pension from an employer — the gap between your retirement prospects and theirs could be substantial. A fair divorce settlement needs to account for this.
What Happens to Pensions in Divorce?
There are three main ways pensions can be dealt with in divorce proceedings:
1. Pension Sharing Order This is the most common approach, and in my view often the fairest. A pension sharing order is a legal instruction from the court that directs a portion of one spouse’s pension to be transferred to the other. The receiving spouse gets their own pension pot in their own name, completely independent of their ex-partner.
I work regularly with clients who have received pension sharing orders, and I help them understand what they’ve been awarded, where it should be transferred to, and how it should be invested going forward. Getting the right advice at this stage is crucial — a pension sharing order is only the beginning. What you do with that money afterwards matters enormously.
2. Pension Offsetting This is where the value of the pension is offset against another asset. For example, one spouse keeps their pension in full, while the other takes a larger share of the equity in the family home.
This can work well in some circumstances, but it comes with risks. A house you live in today and a pension you’ll draw on in twenty years are very different things — and they shouldn’t simply be treated as equivalent. The true value of a pension (particularly a defined benefit pension with guaranteed income) can be very hard to calculate without specialist input, and many people accept a poor deal without realising it.
3. Pension Earmarking Less common these days, earmarking means that when the pension holder eventually draws their benefits, a portion is paid to the ex-spouse. The significant downside is that you remain financially linked to your former partner — if they die before retirement, remarry, or delay taking their pension, it directly affects you. For most people, a clean break via pension sharing is preferable.
The Importance of Getting the Pension Valued Properly
Not all pensions are equal. A defined contribution pension (the kind where you build up a pot over time) is relatively straightforward to value — it’s broadly what’s in the pot on a given date.
A defined benefit pension (also called a final salary pension) is a different matter entirely. These pensions provide a guaranteed income in retirement, and their true value — particularly for long-serving public sector employees — can be enormous. The Cash Equivalent Transfer Value (CETV) quoted by the pension provider is often a significant underestimate of what the pension is actually worth in income terms.
If your spouse has a defined benefit pension, I would strongly recommend obtaining an independent assessment of its value before agreeing to any settlement. This is an area where getting specialist advice could make a very significant difference to your financial future.
What About the State Pension?
The State Pension cannot be shared as part of a divorce settlement in the same way as private pensions. However, it’s still worth considering as part of the bigger picture.
If you have gaps in your National Insurance record — perhaps because you took time out of work to raise children — it’s worth exploring whether you are able to boost your own State Pension entitlement. You can check your State Pension forecast online via the Government Gateway, so you have a clear picture of what you’re entitled to in your own right.
When Should You Get Financial Advice?
Ideally, as early in the process as possible.
Many people come to me once a settlement has already been agreed, wanting help with what to do with their pension share. I’m always delighted to help at that stage — but the truth is, the most valuable time to involve a financial adviser is before you sign anything.
A specialist adviser can help you understand the true value of the pensions on both sides, model what your retirement income might look like under different settlement options, and give you the information you need to negotiate from a position of knowledge rather than uncertainty.
Going through a divorce is hard enough. The last thing you need is to reach retirement and discover that the settlement you agreed wasn’t as fair as you thought.
You Don’t Have to Navigate This Alone
I understand how overwhelming this period of life can be. The financial conversations that need to happen during a divorce are complex, emotionally charged, and often feel like they’re happening at the worst possible time.
My role is to take the complexity away. To sit with you, explain what you have, what you’re entitled to, and what your options are — in plain English, without jargon, and without judgement.
I work closely with family law solicitors and can provide the specialist pension analysis they need to ensure your settlement is properly informed. Whether you’re at the very beginning of the process or working through the detail of a pension sharing order, I’m here to help.
Ready to Take the First Step?
If you’re going through a divorce and want to make sure your financial future is properly protected, I’d love to talk.
Book your free initial consultation today.
There’s no obligation, no jargon, and no pressure — just a friendly conversation about where you are and how I can help.
📞 07957 555006
📧 kelly@kellyeastwealthmanagement.com
🌐 www.kellyeastwealthmanagement.com
Kelly East is an award-winning Independent Financial Adviser and Director of Kelly East Wealth Management Ltd, an Appointed Representative of ValidPath Limited, which is authorised and regulated by the Financial Conduct Authority. Kelly holds DipFA and CeMAP qualifications and is a VouchedFor Top Rated Adviser with over 200 five-star reviews.
The information in this article is for general guidance only and does not constitute personal financial advice. Tax treatment depends on individual circumstances and may change in future. You should seek independent financial advice tailored to your own situation before making any financial decisions.
