For many couples the pensions are worth more than the house. They are also the asset most likely to be undervalued, or quietly left out of a settlement altogether. A simple workplace pot is one thing. A police pension is something else entirely, and so is a self-invested pension that owns the family firm’s premises, and the figure on the statement can be a poor guide to what it is really worth.

Why the transfer value is only a starting point

Every pension has to be disclosed in divorce proceedings, and the figure the scheme provides is the cash equivalent transfer value, or CETV. For a defined contribution pension, where you build up a pot of investments, the CETV is usually a fair reflection of its value.

For a defined benefit scheme it may not be. These schemes promise an income for life, often linked to salary and length of service, and the CETV is the scheme’s own calculation of what that promise is worth today. Two pensions with identical CETVs can produce very different incomes in retirement. Dividing the CETVs equally does not necessarily divide the retirement income equally. Sometimes it is a long way off.

That is why, in cases involving defined benefit or public sector pensions, the court will often expect a report from a pensions on divorce expert, usually an actuary instructed jointly by both of you. The Pension Advisory Group’s guidance on the treatment of pensions on divorce, which the courts use, now deals with this in detail.

Public sector pensions

The NHS, teachers’, civil service, police, firefighters’ and armed forces schemes have features that matter on divorce.

Most of them are unfunded, which means the pension is paid from public money rather than an invested fund. When a pension sharing order is made against one of these schemes, the share cannot be transferred out to a private pension. The receiving spouse becomes a member of the same scheme in their own right, and their pension is usually payable at the scheme’s normal pension age for that type of member, which can be much later than the age at which the original member retires. For a police officer or member of the armed forces who can retire early, that difference matters. The gap can be several years.

There is also the McCloud remedy, which corrects age discrimination in the public sector reforms of 2015 and affects service between April 2015 and March 2022. Some members are due an increase in their benefits that is not yet reflected in the CETV they have disclosed. An expert can say whether that is likely to matter in your case, and it should be checked before any sharing percentage is agreed.

Pensions already being paid

A pension in payment can still be shared. It can also be dealt with by an attachment order, under which part of the pension income or lump sum is paid to the former spouse. Attachment orders have real drawbacks. Income paid under one stops when the pension holder dies, and it also ends if the receiving spouse remarries. A clean pension share is usually preferred.

If the employer’s scheme has failed and is now covered by the Pension Protection Fund, the compensation can be shared too, though the rules differ from an ordinary scheme.

SIPPs and small self-administered schemes

Business owners often hold commercial property inside a SIPP or a small self-administered scheme, frequently the very building their company trades from. A pension share is a percentage of the whole fund, and if most of that fund is a single building there may not be enough cash to pay it.

Sometimes the property has to be sold. More often the claim is met another way, and every option has tax consequences for the business, and the property itself will usually need a separate valuation. Loans from the scheme to the company, which some small schemes make, add another layer to untangle. None of this is quick.

Pensions held abroad

The courts of England and Wales do not ordinarily make orders that bind an overseas pension scheme. That does not mean a pension abroad is ignored. It is normally treated as part of the overall pot, and it is usually dealt with through the other assets instead.

In practice, this means that if one of you has a large pension overseas, that person may receive less of the assets here in the UK to balance it out.

Offsetting: trading the pension for the house

Many couples would rather one person kept the pension and the other kept more of the home. That is called offsetting, and it is often sensible. It is rarely pound for pound.

Pension money is taxed when it is drawn and cannot be touched until retirement age. Equity in a house is available now, tax free. A defined benefit pension also carries a guaranteed income for life, which money in the bank does not. An expert can calculate a fair offset, and the Pension Advisory Group’s guidance sets out the methods. Agreeing a figure without that work is where many settlements go wrong.

Pension built up before the marriage

Where a pension was partly built up before the relationship began, it can be argued that the earlier part should be left out. The guidance is that the start date is normally when you began living together, if that led straight into marriage, rather than the wedding day. Even then, the court will look first at what each of you needs in retirement, and in many cases needs decide the outcome.

Timing and paperwork

A pension sharing order cannot take effect until the final order in the divorce, and the scheme then has four months to put it into effect once it has the order and the information it needs. Schemes can charge for this, and those charges should be agreed in the order. Getting a CETV from some public sector schemes can itself take months. Ask early.

Pensions are the area of a financial settlement where mistakes are most expensive and hardest to put right. A percentage that looks fair on paper can leave one of you with half the retirement income you expected.

Goldsmiths Solicitors have a dedicated Family Law team who specialise in divorce and marital finance disputes. Request a callback or call 0121 690 4000 and ask for the Family Department. You can read more on our financial remedy page.

This article reflects the law in England and Wales as at October 2026. It is general information, not advice on your own circumstances.