What orders can a court make in relation to pensions on divorce?

For many people, a pension is one of the most valuable assets they own. It’s easy to focus on the family home when thinking about dividing assets, but pensions can often hold a significant value and will have a big impact on financial security later in life.

So, what can the Family Court do about pensions when a couple divorces?

Why are pensions important?

• Long-term security: Pensions provide income in retirement, so decisions made now can affect your future lifestyle.
• Often overlooked: Many people underestimate the value of pensions compared to property or savings.
• Complex rules: Pension arrangements are governed by strict legislation, so specialist advice is essential.

The main orders the court can make

The Family Court has three main ways of dealing with pensions:

1. Pension Sharing Order
2. Pension Attachment Order
3. Offsetting

Let’s look at each in turn.

Pension Sharing Order

This is the most common type of pension order today. It allows one person to receive a share of the other person’s pension.

How does it work?

• The court orders the pension provider to transfer a percentage of one person’s pension into a “pension credit” for the other person.
• The receiving party then places this credit into their own pension scheme (either an existing or a new pension).

Example:

If Andrew has a pension worth £500,000 and it is either agreed or the court orders that Betsy should receive 50%, then £250,000 will be transferred to Betsy as a pension credit. However, the actual amount can vary because the percentage is applied at the time of implementation, not when the order is made or when the negotiations took place. Sometimes the actual pension credit received is more, or even less than envisaged when the court order was made.

So if Andrew’s pension grows to £520,000 before the transfer, Betsy’s share becomes £260,000 instead of £250,000. There is nothing that can be done to address this: the law sets out that a pension sharing order has to state the percentage that is to be shared.  It is not possible to express it as a defined sum of money.  

Key points to note:

• Charges: Pension providers often charge for implementing a pension sharing order.
• Timing: It can take several months for the transfer to happen and for the pension company to actually implement the pension share. This can mean the amount of money that actually comes out of a pension as a pension credit can be different to the amount that was envisaged.  
• Not cash: The pension credit cannot be taken as cash; it must go into a pension.
• Advice matters: Independent financial advice is strongly recommended to decide how best to use the pension credit.

Pension Attachment Order

These orders are now rare, but they do still exist.

How does it work?

• Instead of transferring a share now, a pension attachment order says that when the pension holder retires, that’s when the other person will receive a percentage of the benefits.
• This could include monthly income or lump sums.

Example:

Cameron is due to retire in 2030. On retirement he will receive £1,000 a month. The pension attachment order says his ex-spouse Dylan will get 50%. When Cameron retires in five years’ time, the order will kick in and Dylan will start getting £500 a month.

Disadvantages:

• Risk of death: If the pension holder dies in the time between the order being made and actually retiring, the pension will die with them. So if Cameron dies before retirement, Dylan will get nothing.
• No clean break: The couple remains financially tied for years, which most people (and the law) try to avoid.

Offsetting

Offsetting isn’t really an order that the court makes; instead it is more of an approach to the structure of the overall financial settlement. 

How does it work?

Offsetting is an approach where the pension holder retains their pension (and doesn’t share it) and in exchange the other person receives more of the other assets (for example cash or property) because they are giving up something they are entitled to have. Pension offsetting has the advantage of often being a relatively simple and cost effective way to achieve a clean break, especially if the pension value is low. 

However, offsetting can leave one person with little or no money for their retirement and if the pension is very valuable, it might not be the fairest way to divide the assets. In practice we sometimes see pension offsetting being used where a couple’s finances include foreign pensions. Foreign pensions can’t be shared using a pension sharing order.  

Example:

Edie has a pension worth £500,000. The pension is held in Switzerland where Edie used to live and work. The Swiss court will not recognise or enforce an English pension sharing order over the Swiss pension. It is agreed that Fiona will get a larger share of the net sale proceeds of the family home and Edie will keep the pension. 

Important warning:

£1 in a pension is not the same as £1 in cash or property. Pensions are less flexible and subject to restrictive rules. To avoid unfairness, specialist advice is essential. A Pension on Divorce Expert (PODE) can calculate a fair offset figure. 

Things to keep in mind

• Clean break vs ongoing ties: Pension sharing usually allows a clean break, while attachment orders do not.
• Implementation delays: Expect sharing to take months to action, so plan ahead.
• Charges and costs: Providers may charge for implementing orders.
• Future-proofing: Think about your retirement needs, not just immediate fairness.

Common questions we get asked

Do I need a court order for pensions?

Yes. Even if you agree a pension share between yourselves, the pension provider cannot act without a formal court order.  So, if you want a pension sharing or pension attachment order you will need to apply to the court.

Can I take the pension share as cash?

No. Pension credits must go into a pension scheme. 

Is financial advice necessary?

Absolutely. Pensions are complex, and mistakes can be costly.

Final thoughts

Pensions can be tricky, but they’re too important to ignore. Whether you’re considering a pension share, attachment, or offsetting, make sure you:

• Understand your options.
• Get expert legal and financial advice.
• Think about the long-term impact, not just the short-term.

If you’re going through a divorce and want to understand your pension options, speak to our specialist family lawyers. We are experienced in identifying the right arrangements for your specific situation, and we have lots of experience in dealing with pensions held overseas. We can guide you through the process and help you make informed decisions for your future.