Family

Jim Richards
March 2025

Director and Head of Family Jim Richards discusses how despite their usefulness, the use of pension sharing orders in divorce proceedings has not become widespread since their introduction 25 years ago. 

Jim’s article was published in FT Adviser, 20 March 2025, and can be found here. A version of his article was also published in Today’s Wills & Probate, 21 March 2025, and can be found here.

It is a sadly familiar scenario at the end of a marriage – especially in TV dramas. Along with the sale of the house there is the dividing up of the debris from the failed relationship. Who gets the pictures? Who gets the potted plants? Who gets the cat?

Not so often featured is perhaps the most important decision of all: who gets the pension?

A study undertaken on pensions and divorce at the start of the decade by research hub MICRA, based at the University of Manchester, along with the Pensions Policy Institute, came to some clear conclusions.

The research found that there were “wide gendered pension disparities” within couples at the higher end of the income distribution, as well as those at the lower end too. Overall, it suggested that such disparities could make a “marked difference” to couples going through separation proceedings. 

However, unlike a prenuptial agreement, for example, pension sharing on divorce should not exclusively be a concern for the wealthy.

Its potential importance and contribution to wellbeing applies widely across society as a whole.

Yet, in the midst of the mayhem that often accompanies the dissolution of a marriage, it can easily get overlooked.

Pensions often not priority

By and large couples heading for divorce are in their 30s and 40s.

Retirement may seem a long way off and the immediate priority might be ‘what happens now?’ rather than the remote issue of finances 30 years ahead. 

Of course, one aspect of this is that pensions still do not loom large enough in younger, middle-aged people’s awareness. Many do not save enough and they do not do so when they are young enough for it to make a difference. 

As revealed by the MICRA and PPI research, most people are also significantly under-resourced in terms of their retirement income and pay little attention to this until they are in their 50s. 

By this point, it is obviously much harder to compensate by increasing contributions for the years that have already passed.

Meanwhile, on divorce, this deficit problem can be compounded if parties are aiming to take on new mortgages to meet their housing needs with the possibility that they might not be repaid until well into retirement.

Any income that they enjoy must be deployed first to repaying the mortgage. 

They will not have time enough from perhaps their early 50s until retirement in which to put more money into a pension fund.

Short-term thinking about pensions can overlook the importance of long-term financial security – and it also reflects the importance of receiving tailored legal advice.

If you would like advice on divorce and financial settlements, please contact a member of our Family team.