Contact us

When is the court likely to make an order concerning pensions on divorce?

Divorce not only involves emotional adjustments but also careful financial planning, especially when it comes to dividing significant assets like pensions. Pension sharing and other similar orders are one of the mechanisms used by the court to ensure a fair distribution of matrimonial assets following divorce. Let’s delve into when the court is likely to make such orders, the types of orders available and what factors come into play, helping you understand how this process might affect your financial future.

Understanding Pension Sharing and Orders

Since its original enactment, the Matrimonial Causes Act 1973 has been the subject of significant amendments which have radically altered the treatment of pensions on divorce. As a result of these amendments, there are three possible ways of dealing with pension rights on divorce. These include:-

1. adjusting other matrimonial assets to take account of one spouse’s pension rights, known as “pension off-setting”

2. an order which allows for all or part of any pension or lump sum arising at retirement to be “earmarked” for the other spouse, known as “pension attachment”; and

3. splitting the pension so that the pension benefits are physically subdivided at the time of the divorce, leading to the parties having two entirely separate pensions which they can contribute to in the future of their own accord, known as “pension sharing”.

Key Factors the Court can consider

The court will carefully assess various aspects of both parties’ situations before deciding to make an order relating to parties’ pension(s). Here are the main factors they review:

1. Total Financial Picture: The court will examine the entirety of the parties’ assets, including property, savings and investments, alongside the pension. The goal is a balanced distribution of wealth.

2. Duration of the Marriage: In longer marriages, where assets have been accumulated over many years, pension sharing is often seen as part of achieving an equitable financial settlement.

3. Individual Needs and Circumstances: The court considers each party’s financial needs and prospects. This includes future earning potential, current income and retirement needs, ensuring both parties can sustain themselves post-divorce.

4. Contributions and Sacrifices: Contributions to the marriage—financial or otherwise—can influence the court’s decision. Non-financial contributions, such as sacrificing career advancement for family care, are also significant.

5. Age and Stage of Life: The ages of both parties and their proximity to retirement play a role. Younger individuals may have more time to build or rebuild their retirement savings, whereas those closer to retirement age may require immediate pension access to secure their futures.

6. Existing Financial Agreements: Any pre-existing agreements, like prenuptial agreements, might impact the terms of pension sharing or other order, provided they are deemed fair and equitable under current circumstances.

When Are Orders Typically Made?

Pension sharing and other orders are typically considered when pension assets are substantial and integral to ensuring a fair settlement. If one party stands to benefit disproportionately due to significant pension holdings, or if pensions are the primary means of financial security for one or both parties, the court is more likely to intervene and make an order to ensure fairness.

Additionally, if divorcing parties cannot agree on how to handle pensions, the court will intervene to decide. This usually happens in tandem with other financial orders within the divorce settlement process, culminating in a comprehensive strategy to address all assets involved.

Pension sharing, pension attachment and pension-offsetting orders serve as vital tools for achieving fair divorce settlements, ensuring both individuals can look forward to a stable financial future. Understanding when and why courts might impose these orders can help you prepare for discussions around asset division. For personalised guidance, consulting with a family law professional can provide insights tailored to your unique circumstances, helping you navigate the process with greater confidence and less stress.

This blog was prepared by Alexander JLO’s senior partner, Peter Johnson on the 15th January 2025 and is correct at the time of publication. With decades of experience in almost all areas of law Peter is happy to assist with any legal issue that you have. He is widely regarded as one of the capital’s leading divorce lawyers. His profile on the independent Review Solicitor website can be found Here