When it comes to dividing pensions in a divorce, you generally have two main options: sharing the pension itself or offsetting it against other assets. Both approaches aim to achieve fairness — but they work in very different ways.
Pensions are often one of the most valuable assets in a marriage, second only to property. Deciding how to handle them during divorce is one of the most important financial choices you’ll make. But many people are confused by the terms pension sharing and pension offsetting, and aren’t sure which option suits their situation.
This guide explains what each one means, how they work in practice, and how to decide which is best for your divorce.
What is pension sharing?
Pension sharing means that the court orders a percentage of one person’s pension to be transferred into a new pension pot for the other person.
For example, if one spouse has a pension worth £100,000 and the court orders a 40% share, then £40,000 will be transferred into a pension account in the other spouse’s name. This money becomes entirely theirs to manage, separate from the original scheme.
Pension sharing is the only method that creates a clean financial break between both parties when pensions are involved. Once the transfer is made, there are no further ties or claims to the remaining pension.
It’s often used when:
- One spouse has significantly more retirement savings
- There aren’t enough other assets to balance out the value of the pension
- The couple wants to keep their financial lives separate moving forward
What is pension offsetting?
Pension offsetting is where one spouse keeps their full pension, and the other receives assets of equivalent value — such as a larger share of the home, savings, or investments.
For example, if the pension is valued at £80,000 and the couple also owns a property with £160,000 equity, the spouse with less pension value might receive more equity in the home to compensate.
Offsetting is more flexible than pension sharing and avoids having to split or transfer the pension itself. However, it’s not always easy to agree on what counts as “equal value” — because pensions are future income, while property or cash is available now.
Offsetting is often used when:
- There are sufficient assets to balance the division
- One person wants to keep their full pension intact
- The couple agrees to a fair division without splitting pensions
Which is better?
There’s no universal answer — it depends on your goals, assets, and how amicable the divorce is.
Pension sharing creates a more direct and legally secure solution. Both parties walk away with their own pension, and no further claims can be made against each other’s retirement savings. It’s often the court’s preferred approach in longer marriages or where retirement is close.
Pension offsetting, on the other hand, is useful where one person wants to keep their pension untouched — but only works when there are other assets of similar value to divide.
In general:
- Sharing = clear, fair, and long-term protection
- Offsetting = practical and flexible, but not always equal
The court will aim for a fair outcome either way, but you’ll need to understand how pension values are assessed — and how they compare to current property or savings.
How is pension value calculated?
Pension values are usually based on the Cash Equivalent Transfer Value (CETV). This is the amount your pension provider estimates would be needed to transfer your pension to another scheme.
But it’s important to know:
- The CETV may not reflect the full benefit or future income value
- Final salary pensions can be far more valuable than defined contribution pensions
- Getting expert financial advice is recommended, especially if large or complex pensions are involved
If offsetting is being considered, both sides need to be clear on how much the pension is truly worth in comparison to other assets.
Can I choose how pensions are divided?
If you and your ex agree on a fair arrangement, you can put your agreement into a Consent Order and submit it to the court. The judge will review it and, if it looks fair, approve it without the need for a hearing.
If there’s no agreement, the court will decide what’s fair — and often this includes pension sharing, especially in longer marriages where one person stayed home to raise children or support the other’s career.
Whatever the route, the most important thing is to get a financial order approved by the court. Without one, your ex could try to claim a share of your pension later, even if you agreed not to split it.
How Easy Separation UK can help
We help you secure legally binding Consent Orders and Clean Break Orders that protect your pension, formalise your agreement, and prevent future claims.
Whether you’re considering pension sharing or offsetting, we’ll guide you through your options and prepare the right documents to submit to the court — all handled online with a fixed fee and expert support.
Protect your pension, finalise your finances, and move forward confidently.
Start your financial settlement with Easy Separation UK today.
