‍

In partnership with PensionBee

Separation or divorce comes with a whirlwind of admin, from sorting living arrangements to working out parenting plans and dividing assets. With so much to deal with, pensions can often get left until last, but if you’re separating from a partner, understanding how pensions are split and what you’re entitled to can be key to your long-term financial security.

Whether you're currently going through a divorce or reviewing things after the dust has settled, this guide is here to help. We’ll explain the basics of what happens to your pension during a divorce, what it could mean for you as a single parent, and how to take practical steps to protect your future.

Why pensions matter in a divorce

When you think about splitting finances during a divorce, you’re  likely to be focused on immediate issues like the house, bank accounts or who’s keeping the car. But pensions can be one of the most valuable assets in a relationship, sometimes worth even more than a property.

That’s why it’s so important to make sure they’re not overlooked, especially if you’ve taken time out of paid work to raise children. If your former partner has built up a larger pension during the relationship, you may be entitled to a share, and that could make a real difference to your retirement later on.

What about unmarried couples?

If you’re separating from a partner you weren’t married to or in a civil partnership with, it’s important to know that the rules are different. A Pension Sharing Order (PSO) is only available in divorce or dissolution of a civil partnership. Unmarried couples are not legally entitled to each other's pensions, even if they have lived together for many years or have children together.

Similarly, if you are married and choose only to separate, not divorce, you won’t be able to formally share your partner’s pension, although you may still be entitled to their pension or a lump sum when they die.

What is pension splitting?

Pension splitting is one way of dividing pensions fairly when a relationship ends. It’s a legal arrangement that gives one partner a share of the other’s pension and that share becomes theirs to manage as part of their own retirement savings.

There are three main ways pensions might be dealt with during a separation:

1. Pension Sharing Order (PSO)

This is the most common formal method. A court decides what percentage of one partner’s pension should be transferred to the other. The receiving partner gets their share moved into a pension in their name and has control, within normal pension rules, over how and when they use it. For example, they can choose the provider and manage the investment, but they can usually only access the money from age 55, rising to 57 from April 2028, and this is subject to any tax implications.

2. Pension Offsetting 

Rather than sharing the pension directly, its value is taken into account when dividing other assets. For example, one partner might keep more of the house’s equity, while the other keeps their pension untouched. This approach only works if there are enough assets to balance things out.

3. Pension Attachment Orders 

Also known as ‘earmarking’ in Scotland, this is a less common option where a portion of the pension is paid to the ex-partner when the pension holder retires. The receiving partner has to wait until their ex starts drawing their pension and has no control over when or how that happens.

Each method comes with pros and cons, so it’s always worth getting independent financial and legal advice before deciding what’s right for your situation.

Two additional options, which are only available in England, Wales and Northern Ireland, are a deferred lump sum and a Deferred pension sharing Order. 

Why location matters

It’s important to note that the rules around pension sharing are not consistent across the UK, so where you happen to live can potentially have a big impact. If you’re in England, Wales or Northern Ireland, pension sharing calculations are based on the entire value of your combined pension pots, including any money that either of you saved before you met or after you separated. 

If you’re in Scotland however, it works differently. Couples who are divorcing in Scotland will split their pensions based only on what they contributed during the time that they were married. Even if you raised children together for ten years before marrying, your entitlement is based solely on the value of the contributions made while you were married. 

How does a Pension Sharing Order actually work?

To get a Pension Sharing Order, you’ll need to go through the legal process as part of your financial settlement during divorce or dissolution proceedings. The key steps include:

• Getting a valuation of all pensions involved, including workplace pensions, personal pensions, and defined benefit (final salary) schemes.
  
  
• Agreeing or negotiating the split, either between yourselves, through mediation, or via the courts.
  
  
• The court issues the order, which is legally binding, and instructs the pension provider to make the transfer.

You’ll then need to set up a pension to receive the transferred amount, if you don’t already have one. A provider like PensionBee can make this part simpler, by letting you manage your pot online and combine old pensions in one easy-to-manage place.

Already divorced, but didn’t split pensions?

If your separation is in the past and pensions weren’t part of your settlement, it might still be worth seeking advice, especially if no legal agreement was made, or if your ex-partner has since retired.

While it’s often easier to deal with pensions at the time of divorce, some financial claims can still be pursued afterwards in certain circumstances. A family law solicitor can advise you based on your situation.

What if you're the one with the larger pension?

You might be on the other side of the equation - perhaps you’ve built up a pension and your ex hasn’t. In this case, you might be concerned about losing part of your savings.

It’s helpful to remember that pension sharing isn’t about ‘punishment’ or ‘losing out’ - it’s about recognising the contributions both partners made to the relationship. If one person took on unpaid work (like childcare or running the home), that’s still a contribution that deserves to be valued.

Things to keep in mind:

• Don’t bank on sharing your State Pension. Anyone reaching the State Pension age after April 2016 receives the new State Pension that can’t be shared following a divorce. 
• Consider pension consolidation. If you’re receiving a pension share and already have a few scattered pensions, it might make sense to bring them together in one place. Providers like PensionBee offer tools to help you combine your old pensions, manage them and see your live balance online or via their app.
  
  
• Update your beneficiary information. After a separation, make sure your pension provider knows who should receive your pension if something happens to you, especially if you no longer want your ex listed as your beneficiary.

Securing your future, one step at a time

Divorce is hard - emotionally, practically, and financially - but understanding your pension rights can help you take back control of your future. As a single parent, you may already be juggling a lot, but that doesn’t mean your retirement security has to take a back seat.

Whether you’re entitled to a share of your ex’s pension, or you need to make a plan to build your own, the most important thing is to start where you are. Ask questions, get advice and take one small step at a time.

You’re not behind, you’re moving forward.

‍

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

About PensionBee

PensionBee can help you combine your old pension pots into one easy-to-manage online plan that lets you keep track of your balance, make flexible contributions, invest in line with your values and make withdrawals from the age of 55 (rising to 57 from 2028). For more information, visit PensionBee.

Learn how long your pension could last with the PensionBee Pension Calculator.

Follow @PensionBee on X, Threads, Instagram, TikTok, Facebook and LinkedIn.

‍