UK: Untying The Knot

Last Updated: 31 October 2011
Article by Amy Radnor

The dissolution of a marriage is not often straightforward and can be complicated by the dividing up of both parties' pension provision.

Although the process for divorce is well-established, the division of assets will depend on the circumstances of every divorcing couple and the calculations can often be complex and difficult. As well as dividing up real property, bank accounts, shares and other assets, the court will also look at both parties' pension provision.

If one spouse never worked for instance, while the other built up a large pension fund, this will have to be taken into account to make sure both parties have an adequate income on retirement. The calculations can be complex, and for some couples a pension may be the single most valuable asset in the pot after the family home.

A court has the power to make a 'pension sharing order' on any divorce in England and Wales where there is an applicable pension, although they cannot be made in relation to foreign pensions nor can they be made over a basic state pension. It is important also to be aware that pension sharing is not available on judicial separation but only on a final decree of divorce, and one of the crucial disincentives of the judicial separation route is the court's inability to order a pension share.

In terms of the practical procedure, the first step is for the pension fund to be valued, and that often means instructing an accountant or an actuary to prepare a report, especially for large pensions which are often made up of different components with different rules. Once the fund value has been determined, the court will then order a division which has to be expressed as a percentage share of the total fund value.

The spouse receiving the pension share is then "credited" with that percentage, which becomes entirely theirs. The great appeal of a pension share is that there is a "clean break", in that the fund is completely divided and becomes two entirely separate pots. Any payments after that date which are made by the ex-spouse, or their employer in the case of an occupational pension, go only to the ex-spouse's fund and will not benefit the receiving spouse. The receiving spouse may decide to keep their share in the same scheme as the ex-spouse, or transfer it to a completely new scheme of their own choosing. It is theirs to manage as they wish, subject to the rules of the scheme.

A pension credit cannot be taken as cash. If the receiving spouse decides to transfer the fund out of the original scheme and place it elsewhere, the original pension fund will need to have confirmation from the new fund that it is instructed to accept the credit and the payment will be made directly between them without passing out to the ex-spouse.


The share of a pension must be expressed as a percentage, and that will need careful consideration where the pension fund in question has a value which fluctuates considerably. Any percentage can be specified. It is possible to order a 100 per cent pension share, which simply means the transfer of a whole pension fund from one spouse to another. Pension sharing orders can be made over pensions which are already in payment.

Where a pension sharing order cannot be made for whatever reason (for instance on a petition for judicial separation rather than divorce) the court has power to make a 'pension attachment order', sometimes referred to as ear-marking. With an attachment or earmarking order, the receiving spouse does not receive their own separate pension fund to do with as they will, as under a pension sharing order. Instead, a pension attachment order requires the trustees or managers of a particular pension scheme to ear-mark a certain percentage of the member spouse's pension and pay it to their ex-spouse each year or each month. This also includes a percentage of their commutation lump sum, if and when they take benefits on retirement.

The receiving spouse will receive a monthly or yearly sum of money, akin to maintenance, but will not have control over how and where the fund is invested or the ability to make decisions about when and if to take a lump sum. Another key difference is that because the ex-spouse does not acquire their own pension rights, as they do under a pension sharing order, the right to the percentage payments dies with the member spouse. This can leave ex-spouses without pension income in later life when it is most needed unless there is provision in any settlement (for instance a life insurance policy) or by way of the member spouse's will, to provide for the surviving party. For all of these reasons, and crucially because it does not provide a clean break, pension attachment orders are rare and generally a pension sharing order will be the preferred option. The same pension arrangement cannot be both attached and shared in the same set of proceedings.

The exact terms of the percentage division on a pension sharing order will be the subject of negotiation and depend very much on the circumstances of each case. In long marriages with children the presumption is that, like other assets, there should be a 50/50 division. The court's emphasis will be on ensuring that both parties have an equal income in retirement, and in the case of valuable pensions, the receiving party will usually want to obtain a pension report from an actuary to determine exactly what share of the pension will be required to produce the same income for them in retirement as their former spouse, given that women have a longer life expectancy and therefore currently have different annuity rates (but this may change following the new ruling on gender discrimination on annuity rates). This is particularly the case also where one party has health considerations which need to be factored in. It may be that an unequal division is required in order to produce an equal income when it is needed.


The exact division of a pension is negotiated by practitioners in the context of the division of the other assets. Often, couples have several pensions between them. Very often, for instance, a party with an occupational pension at a place where they are still employed, or a self-invested pension that they alone have built up and controlled, will want to keep the whole of that favoured pension intact and will be prepared to trade off other, less valuable, pensions or cash in recognition of that. This is a practice known as off-setting which is not a separate power open to the court but rather an exercise performed in negotiations.

It does require there to be available liquid funds to compensate the other party, and if there is not enough cash available to perform the off-setting exercise then the court will have no option but to make a pension sharing order regardless. Sometimes there is no option but to off-set, for instance where there is a foreign pension the court cannot order a pension sharing order and will have to compensate the other spouse with cash (provided of course that liquid funds are available to do so).

If one party is taking cash in lieu of pension, how much are they entitled to? Is it pound for pound? In fact, it is generally accepted that cash paid in lieu of pension is more valuable than a pension credit as it is free cash rather than an asset which is locked in and not going to become available to a spouse for many years to come. There is also the risk that the receiving spouse may die before becoming eligible for pension benefits and therefore get no enjoyment at all from the money. Broadly, a discount of about one-third is applied to what the recipient would have received on a pension share when calculating what they should receive as a cash balancing sum.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.