Pensions in divorce and financial mediation

Often the largest asset after the family home, and the one most easily left out of the conversation.

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Pensions can be easy to overlook during separation, because they do not feel as immediate as the family home or the money in a bank account.

But they can be one of the largest assets a couple has. Sometimes a pension is worth as much as the equity in the family home, or more.

That is why pensions need to be properly included in financial disclosure before anybody starts making final decisions about a settlement.

Start by identifying the pensions

As part of disclosure, each person should provide information about their pensions. That can include a pension from a current employer, old workplace pensions, personal pensions, defined-benefit or final-salary schemes, pensions already being paid, and relevant State Pension information.

An old pension should not simply be ignored because nobody has paid into it for years.

At this stage the job is only to understand what pensions actually exist. It is worth asking providers early, because the paperwork can take some weeks to arrive.

What is the Cash Equivalent?

Pension providers can usually supply a Cash Equivalent, often shortened to CE.

It is an important figure. It does not always tell the whole story.

Two pensions showing similar Cash Equivalent values can provide very different benefits in retirement. That can matter particularly with defined-benefit and some public-sector schemes.

The current Pensions Advisory Group guidance, generally referred to as PAG2, explains why relying on the Cash Equivalent alone can sometimes be misleading.

Do we always need a pension expert?

No. Many cases are dealt with without a specialist pension report.

There are situations where advice from a Pension on Divorce Expert, usually called a PODE, helps both people understand the pension properly before deciding anything. That can be useful where there are substantial defined-benefit pensions, public-sector schemes, several different pensions, a significant difference in the two people’s ages, or where one person is considering keeping more of another asset instead of sharing a pension.

An expert may be able to model what different pension-sharing arrangements would actually mean in retirement.

The cost depends on the complexity of the pensions and the work involved, so we do not put a figure on it here. If specialist advice looks useful, it is discussed before either of you commits to the expense.

How can pensions be dealt with?

Pension sharing

A Pension Sharing Order can provide for a percentage of one person’s pension rights to be transferred for the benefit of the other, as part of the financial court order.

Offsetting

Here the pension is taken into account when deciding how the other assets are divided. One person may propose keeping more of their pension while the other receives more of the equity in the family home.

That comparison needs care. £100,000 in a pension that may provide an income later in life is not automatically the same as £100,000 of property equity available now.

One of the reasons PAG2 gives such extensive guidance on pensions is that these comparisons can become technically difficult.

Pension attachment

Pension attachment orders also exist, although they are now much less commonly used than pension sharing.

How pensions fit into mediation

Pensions form part of your financial disclosure first. They are then normally recorded with the rest of the financial information in the Open Financial Statement.

If a specialist report or other advice is needed, it usually makes sense to obtain it before final pension proposals are made rather than after.

The pension can then be considered alongside everything else: the family home, savings, debts, income, mortgage capacity, and what each of you may need in future. Financial mediation is where those options get explored together.

The mediator does not tell either person what percentage of a pension they should accept. You can take independent legal, pension or financial advice before making a final decision.

What if some of the pension was built up before the marriage?

This is a question we are asked often.

A pension may have been built up partly before the relationship, partly during it, and sometimes after separation. That does not mean the mediator simply removes one period from the calculation.

How different periods of accrual should be treated can depend on the circumstances of the case. It may need legal advice, and in some cases specialist pension calculations.

In mediation we can identify the issue and make sure it is properly considered, rather than assuming there is one rule that fits every family.

What if we agree to share a pension?

A pension cannot be divided simply because the two of you agreed it in mediation.

If pension sharing forms part of your settlement, the proposals are recorded in your Memorandum of Understanding. A solicitor or other suitably qualified legal professional can then incorporate the pension arrangements into the appropriate financial consent order.

The pension provider also has its own requirements for implementing a Pension Sharing Order.

The court order is an important separate stage after mediation.

Pensions are part of the whole financial picture

It is usually a mistake to look at a pension entirely on its own.

One person may be most concerned about keeping the family home. The other may be thinking about retirement. Mortgage capacity, age, income, housing needs and the other available assets all bear on what proposals make sense.

That is why financial mediation looks at the whole picture, rather than settling one asset in isolation.

If you are unsure

You do not need to understand pensions before starting financial mediation.

Bring the information you have. As disclosure develops, we can identify what is missing and whether any questions need specialist advice before settlement discussions go further.

Sources and further reading

This page is general information about family mediation. It is not legal advice about your own situation. Nor is it financial or pension advice.

Written by an FMC-accredited family mediator Last reviewed August 2026