Pensions on Divorce

How Pensions Are Dealt With on Divorce

In England and Wales a divorce does not split a pension by itself. Pension rights move only under a court order, so pensions belong inside the wider financial settlement. There are three methods:

• a pension sharing order: a percentage of one person's pension rights is transferred, creating a debit against the member's rights and a credit for the other party under section 29 of the Welfare Reform and Pensions Act 1999
• offsetting: one of you keeps the pension and the other takes more of the remaining capital or income instead
• a pension attachment order: the scheme pays a percentage of a pension, or of a lump sum, to the other party when it falls due. These are now rare, although they still suit death in service benefits.

Almost every kind of pension can be shared, including one already in payment. The power arises on a divorce or nullity order under section 24B of the Matrimonial Causes Act 1973, and on the dissolution of a civil partnership under Schedule 5 to the Civil Partnership Act 2004, but not on judicial separation.

The State Pension is separate. Under section 47 of the Welfare Reform and Pensions Act 1999 only part of it can be shared, and which part depends on when the pension holder reached State Pension age: Additional State Pension where that was before 6 April 2016, and the protected payment, the part of a starting amount above the full new State Pension rate, where it is on or after that date. The basic and new State Pension themselves are not shareable. Both of you complete form BR20 for a valuation.

How the Court Decides What Is Fair

Section 25 of the Matrimonial Causes Act 1973 requires the court to weigh all the circumstances, with first consideration given to the welfare of any child of the family under 18. Section 25B puts pensions inside that exercise: the resources counted include benefits a party has or is likely to have under a pension arrangement, and the words 'in the foreseeable future' do not apply to them, so a pension decades away still counts.

GOV.UK lists what a judge weighs where you cannot agree: how long you were married, your ages, ability to earn, property and money, living expenses, standard of living, needs and responsibilities, the part each of you played in looking after the family, and any disability or health condition. Arrangements for the children come first.

The Pension Advisory Group guide says it will often be fair to aim at similar incomes in retirement, while equality may not be the fair result once needs, contributions, health, ages and the length of the marriage are weighed. In most cases the assets do not exceed what you both need, and the court can then look to any asset whenever it was built up. Where there is more than enough, the timing and source of pension saving stays live.

Valuation, Evidence and Common Problems

In proceedings each of you discloses your finances in Form E, which has a pension section, and rule 9.30 of the Family Procedure Rules requires the party with the pension rights to request a valuation from each provider within seven days of being notified of the first appointment, unless a valuation less than 12 months old has already been requested or received. Sending the Pension Inquiry Form to every provider early is good practice: it collects the information prescribed by the Pensions on Divorce etc. (Provision of Information) Regulations 2000 and states the scheme's charges for a share.

The figure that comes back, the cash equivalent, is a starting point rather than an answer:

• for a straightforward defined contribution fund with no in-built promises it is often a reliable value
• defined benefit rights need more care, and cash equivalents from defined benefit and defined contribution schemes are very often not comparable
• unfunded public service schemes can generally only give a credit inside the scheme, while some arrangements offer only an external transfer, which brings in regulated financial advice
• for offsetting the cash equivalent is often not the right value at all, and the Pension Advisory Group records that negligence claims in pension cases overwhelmingly relate to ill considered offsetting
• a pension left off the disclosure: see hidden assets and non-disclosure

Where the figures need an expert, a pensions on divorce expert is normally instructed by both of you as a single joint expert under Part 25 of the Family Procedure Rules, to value the pensions and give an opinion rather than to decide the outcome.

How a Pension Sharing Order Is Made

1. We gather the evidence: the Pension Inquiry Form to each provider, form BR20 for the State Pension, and the pension section of Form E in proceedings.
2. We advise on method and figures, and agree a single joint expert with the other side where the case calls for one.
3. If you agree terms, they go into a consent order with a pension sharing annex (Form P1) for each pension, and the statement of information that explains any offset.
4. If you cannot agree, you must attend a mediation information meeting before applying to the court, unless an exemption applies, for example where there has been domestic abuse, and the application is then made on Form A in financial remedy proceedings and served on the provider.
5. We ask the provider to approve the wording of the order and the annex first: for a consent attachment order the rules require the draft to be served on it, and it avoids a sharing order the scheme cannot implement.
6. The order cannot take effect until the divorce order is final, and under regulation 9 of the Divorce etc. (Pensions) Regulations 2000 not until 7 days after the time for appealing has ended, which is normally 21 days from the decision under rule 30.4 of the Family Procedure Rules, so about 28 days in all. The court then sends the order and the annex to the provider, or directs one of you to do so.
7. Once the provider holds the order, the matrimonial documents and the prescribed information, the four month implementation period under section 34 of the Welfare Reform and Pensions Act 1999 begins, and in practice the scheme also expects its charges to be met first. Where an external transfer is available, the person receiving the credit chooses the destination scheme, a regulated financial advice question.

Timing, Death Benefits and the Final Order

GOV.UK advises applying for a financial order after the conditional order and before the final order, because applying afterwards can have financial consequences, particularly for pensions. Where a sharing order has been made, the Pension Advisory Group guide advises thinking carefully before applying for the final divorce order: if the pension holder dies first, the other party has no order in their favour and is not a widow or widower entitled to death benefits. The guide suggests considering whether to delay applying until 28 days after the pension order was made.

Death in service benefits can be dealt with by attachment under section 25C of the Matrimonial Causes Act 1973.

There is little room to change a sharing order later. Section 31 allows variation only where the order was made before the divorce order became final, so afterwards the routes are an appeal or an application to set it aside rather than variation. If you are thinking of remarrying, take advice first: section 28(3) bars a remarried party from applying for a financial provision or property adjustment order, and the position on a pension sharing claim is not settled.

Where the share is meant to end the financial relationship it is usually paired with a clean break order; where income is still needed it sits alongside spousal maintenance.

When Legal Advice Is Especially Important

Advice is worth most before anything is signed, and particularly where:

• one of you has a final salary, public service or uniformed service scheme
• you are offered the family home or cash instead of a pension share
• there is a significant age gap, or one of you is at or near retirement
• a pension has been drawn, moved into drawdown or partly taken as a lump sum since you separated
• there are several pensions, or assets beyond what either of you needs: see high net worth divorce
• a pension is held abroad, or the divorce itself is happening abroad: see international family law
• the divorce is about to be made final, or you are planning to remarry

The Pension Advisory Group guide records that although a Pension Inquiry Form ought to be obtained for every pension under consideration, that practice is widely ignored by practitioners and courts. In Lewis v Cunningtons Solicitors [2023] EWHC 822 (KB) the court said the Pension Inquiry Form ought to be used by solicitors in every case where a pension sharing order might be made.

How RakLAW Solicitors Can Help

Our family solicitors work from 42 Shad Thames in Southwark, a short walk from Tower Bridge, with Tower Hill, London Bridge and Bermondsey the nearest stations. The first 15 minute consultation is free.

We take the pension work from valuation to implementation. Related topics sit on our money and financial settlements hub, including child maintenance and enforcing a financial order.

Court fees are listed on the GOV.UK court fees page, and providers may charge for implementing a share. RakLAW Solicitors does not offer legal aid; our charges are on the family law fees page. Call 0203 345 2000 or book an appointment. RakLAW Solicitors is SRA regulated, SRA number 8007405.