A blog by Blue Stephenson, Family Solicitor at Graham & Rosen

In a large proportion of divorce cases – particularly those where the assets are modest - one or both spouses’ pension rights will often represent one of the most valuable assets in the case. Despite this, pensions remain one of the most overlooked areas whenever agreement is reached between parties by consent as to how their assets should be divided upon divorce or dissolution.

The Current Law

When exercising its powers in financial remedy proceedings, the court must have regard to the pension rights held by each party (even if the benefits are not likely to be received in the foreseeable future) and the loss of any such benefits which will be suffered by the other party when a Final Order of divorce is made.[1]

The most common type of pension-related order is called a Pension Sharing Order. This is an order whereby the court directs that a percentage of the value of one party’s pension fund is debited from that pension and credited to a pension in the name of the other party. The receiving party is then able to draw their pension benefits upon reaching their normal retirement age.

The overriding aim of the court in divorce cases is to achieve an outcome which is fair between the parties. This applies as much to pensions as to other assets and income. It will often be fair to aim to provide parties with similar incomes in retirement, however, equality will not invariably produce a fair result and, depending upon the nature of the pension(s) involved, it will often be necessary to appoint a Pensions on Divorce Expert (PODE) to prepare a bespoke pensions report.

A PODE report can be commissioned to explore all kinds of different pension issues including, for example, the amount of future income that will be generated by a proposed pension share. A PODE can also evaluate the unique features inherent in certain types of pension scheme, for example defined benefit public sector pensions which can be notoriously complex.

Statistics

Pensions Age magazine reports that the average age at which people divorce in England and Wales has been steadily increasing since 1985[2], and according to the most recently available data from the Office for National Statistics (ONS)[3], the average age for men to divorce is 45, while for women it is 42.

HMCTS data shows an upward trend in applications for a Financial Remedy Order by consent from the third quarter of 2022. During the latest quarter to March 2025, 74% of financial remedy applications were uncontested whilst 26% were contested.[4]

Further data obtained from a freedom of information request showed that the number of applications for Pension Sharing Orders had fallen by 35% since 2017, from 36,202 to 23,622 in 2021.[5]

It can be reasonably concluded from these statistics that pensions remain overlooked in many cases and this can lead to financial prejudice later in life for the financially weaker party.

Why Does It Matter?

In the current economic climate, it is unsurprising that divorcing parties would wish to save costs wherever possible. After all, separation can be a time fraught with financial uncertainty, and consideration of future income needs in retirement often must give way to more immediate capital needs such as the need for stable housing.

This difficulty can be even more prominent in cases where the party with pension rights is unwilling to provide disclosure of their pension(s), and the other party does not have the funds to take their spouse or ex-spouse to court. This can often result in settlements being agreed between parties which fail to properly consider pensions; in particular, the income producing qualities of a pension which can be especially pertinent for defined benefit pensions which have their own unique features.

In the case of older parties who may have sacrificed the opportunity to contribute to a pension during their lifetime, the need to share in their spouse or former spouse’s pension can be even more crucial to ensure the appropriate provision upon retirement.

Therefore, the importance of taking early legal advice before agreeing to any financial settlement cannot be understated and this can make a world of difference to the party without any, or only minimal, pension provision of their own.

[1] Matrimonial Causes Act 1973, s25B(1)

[2] https://www.pensionsage.com/pa/Pension-sharing-orders-slump-despite-growing-number-of-divorces.php

[3]https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2022#:~:text=In%202022%2C%20the%20median%20duration,longest%20seen%20in%20our%20timeseries.

[4] https://www.gov.uk/government/statistics/family-court-statistics-quarterly-january-to-march-2025/family-court-statistics-quarterly-january-to-march-2025#financial-remedy

[5] https://www.pensionsage.com/pa/Pension-sharing-orders-slump-despite-growing-number-of-divorces.php