Pensions in divorce: often the biggest asset after the family home

When a marriage or civil partnership ends, attention naturally turns to the house, the savings and who keeps what. Pensions are frequently overlooked - and yet, for many couples, the combined value of their pensions is second only to the family home, and sometimes exceeds it. Ignoring them can lead to a settlement that looks fair on paper but leaves one person far worse off in later life.

In England and Wales, pensions built up by either party are generally treated as assets of the marriage that can be shared on divorce - regardless of whose name is on them. That includes workplace pensions, personal pensions and SIPPs, and the valuable public-sector pensions held by NHS staff, teachers, civil servants, police officers, members of the armed forces and local government workers. The court's aim is a fair outcome overall, and pensions are firmly in scope. (Scotland has a different framework, broadly focusing on pension rights built up during the marriage.)

Each pension has a 'cash equivalent' value - a figure calculated by the scheme using actuarial assumptions. For a straightforward defined contribution pot, that figure is generally a useful starting point. For defined benefit and public-sector pensions, however, the cash equivalent may not provide a reliable like-for-like comparison for divorce purposes or reflect the cost of replacing the promised income, increases, early-retirement terms and survivor benefits.

This is why comparing pensions solely by their cash equivalent values - or offsetting a pension against cash pound-for-pound - may produce a misleading result. Two pensions with the same cash equivalent can provide materially different retirement benefits.

A common assumption is that pensions should simply be split down the middle. Sometimes that is right, but often it is not. A fair settlement might aim to equalise the income each person will eventually receive in retirement, rather than to divide today's capital values equally - and those two goals can point to very different splits, particularly where there is an age gap or where the pensions are of different types. What counts as fair depends on the whole financial picture and the couple's circumstances, which is precisely why pensions on divorce reward careful analysis rather than rough rules of thumb.

The values involved are not static. Public-sector pension valuations, in particular, are sensitive to the financial assumptions set by the Government, and those assumptions were revised in 2026 - which can move cash equivalent figures for schemes such as the NHS. The April 2027 Inheritance Tax changes may also be relevant to wider post-divorce estate planning, but they will not necessarily determine how pension assets should be dealt with in the settlement. Pension figures obtained even a year or two ago may no longer be current.

We help you understand the pension information and the effect of a proposed settlement on your wider financial position, working alongside your solicitor and an independent pension expert where specialist valuation is required.