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10 Jan 2022

Divorced women face unstable retirement as pensions left out of settlements

Few divorcing couples agree to share this major asset

Only 15% of divorcing couples include pensions in their financial settlement, according to a survey of Which? members carried out in November 2021.

The first working Monday of the new year is often nicknamed 'Divorce Day' by family lawyers to reflect the surge in enquiries they receive from couples seeking to end their marriage after the festive season.

Our research shows that separating couples often make the same mistake when they file for divorce - overlooking one of their biggest joint assets: pensions.

Here, we explain why pensions matter for divorcees and how to split pension savings.

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The silence around pensions

Pensions are usually the single biggest asset for divorcing couples and make up 42% of total household wealth, according to the Office for National Statistics. By comparison, the share of wealth held in property is 36%.

Even though the law changed in 2000 to allow divorcees to share pensions, few appear to take this route. The majority (58%) of the 453 people we surveyed said pensions weren't even discussed at their divorce proceedings.

'People frequently underestimate just how valuable pensions can be,' said Jenny Arnold, a partner at JMW Solicitors, who specialises in divorce. 'Pensions don't tend to set people's pulses racing because they can feel quite remote, unless the parties are nearing retirement age.' The family home or business, she told Which?, are more likely to be at the forefront of people's minds.

But choosing the family home over a pension sharing order can leave former spouses with desperately little income in retirement - particularly women.

Women losing out

Pension wealth is very unequally distributed among married men and women. A new study by the University of Manchester shows the average married woman aged between 65-69 has just £28,000 in pension wealth - whereas the average man has almost ten times that.

So a divorce where pensions aren't split can leave women significantly worse-off financially. 'My ex-husband was clearly not ready to share his military pension. I had to return to full-time work to get by,' one Which? member told us.

Splitting pensions can be a daunting task, usually requiring the guidance of a solicitor or financial advisor.

Splitting pensions: what are your options?

Here are your options for splitting pensions:


Pension offsetting is where one person keeps their pension in exchange for giving up another asset, such as the family home.

Pros: This approach is relatively straightforward, allowing for a clean break.

Cons: The party who forfeits the other's pension may lose out - 'fair comparisons between pension and non-pension assets are extremely problematic,' warns Jenny Arnold.

Pension sharing order

With pension sharing, a percentage of one person's pension is transferred to the other.

Pros: Both parties end up with a separate pension.

Cons:It's relatively complex initially. You may need financial advice (which comes at a cost) to improve your chances of getting a fair split.

Pension attachment order/earmarking

One person pays an income or lump sum to the other when they start taking their pension.

Pros:Like pension sharing, it can result in a fairer split of the pension.

Cons: An attachment orderessentially a form of maintenance paid to the former spouse, so it doesn't allow for a clean break. The pension-holder retains control over the choice of investments and when the payments to their ex-partner are made.

Other tips for preserving your wealth in a divorce

Make use of free guidance

For free guidance on how to separate your finances at divorce, you can contact your nearest Citizens Advice. Alternatively, you could book a free appointment with a specialist in MoneyHelper to discuss the pensions options available to you.

Check if you qualify for government support

Depending on your income, savings, and how complex your case is, you may be able to get help covering legal costs from the government.

Keep solicitors' fees down

Lawyers typically charge by the hour, so be mindful of how you use their time. Before shooting off an email, consider whether you could get the answer to your query elsewhere, for free, and avoid using them as a go-between between you and your spouse for non-legal issues.

Consider getting a consent order

Without a consent order for ancillary relief, a former spouse could bring a claim for maintenance years after the divorce has happened. So if your business became successful, for example, your ex-partner might be able to claim some of the profits, even decades down the line.

To make this legally binding, you'll need to draft a consent order and send the relevant forms to the court for approval. It costs £53 to apply.