How a financial planner can help your divorcing clients share their pensions

Rarely does a month pass by without news of the latest celebrity divorce hitting the headlines. Most recently, the comedian and actor Sacha Baron Cohen and actress, Isla Fisher, announced their plans to separate after nearly 14 years of marriage.

However, it’s not just A-listers who are heading to the divorce courts. According to figures published in the Standard, nearly half of all marriages in the UK end in divorce, and the average length of marriage is currently 11.9 years.

Divorce can take both an emotional and financial toll on a couple. If you have clients who are going through this process, they may be struggling to keep track of the financial aspects involved alongside coping with their feelings.

And yet, it’s important that they consider their pensions as part of their divorce settlement. Neglecting to do so could result in your client receiving a lower retirement income than they’ve planned for.

Read on to explore why your divorcing clients should consider sharing their pension assets and find out how a financial planner can help.

Pension sharing could help your clients protect their financial future

A pension is often one of the most valuable assets a couple holds. And yet, research conducted by the University of Manchester has revealed that only 12% of divorces involve some form of pension-sharing arrangement.

This may represent a particular financial challenge for women.

Figures published in the 2024 NOW: Pensions gender pensions gap report have revealed that women retire on average with pension savings of ÂŁ69,000, compared to ÂŁ205,000 for men.

Several factors may contribute to this discrepancy. For example, women are more likely to take a career break or reduce their work hours to care for children or other family members. If a woman contributes less (or nothing) to her pension during these periods, this could affect the size of her pension pot when she retires.

So, if your female client waives her right to her spouse or civil partner’s pension when they divorce, she could be significantly depleting her potential retirement income.

Additionally, equitably dividing pension assets can offer both parties a clean break and the peace of mind that they are provided for in retirement. This is especially true as a legal pension-sharing agreement will not usually be affected by remarriage, death, or any other change in circumstances.

How a financial planner can help your divorcing clients reach a fair pension-sharing arrangement

A financial planner can help your client understand the importance of including a pension-sharing agreement in their divorce settlement.

For example, pension sharing may be especially important if your client is close to retirement age and would find it difficult to build up similar pension benefits in a short time.

By reviewing your client’s financial situation – and potentially that of their partner – a financial planner can help your divorcing clients reach a fair arrangement in the following ways:

Explaining the pension-sharing options available

Three of the most popular pension-sharing routes for divorcing couples are:

  • A Pension Sharing Order – A court order that allows a couple to divide their pension funds upon divorce.
  • Offsetting – The value of any pensions is offset against other assets the couple holds, such as the family home.
  • Earmarking – Pensions are not split on divorce but instead, part or all of one person’s pension is reserved for their partner’s retirement.

There are pros and cons to each of these approaches and so professional advice can add value.

Using cashflow modelling to help your client plan for the future

Cashflow modelling is an invaluable tool for providing a picture of an individual’s financial future.

A financial planner can use cashflow modelling to project the income that your client might receive based on any proposed financial settlement. Comparing this to your client’s retirement needs could help them understand how their long-term financial plans could be affected by dividing assets such as pensions.

A financial planner can also use cashflow modelling to help your client create a pension saving plan that aligns with their retirement goals if they return to a single income.

Providing a Pension Sharing Report to help your client make an informed decision

Pensions can be complicated to understand and deciding how to share them fairly is not always straightforward. Determining exactly what constitutes a “fair” split can be contentious.

So, a Pension Sharing Report can be an invaluable resource for helping both your client and their partner make an informed decision about the division of their pensionable assets.

A Pension Sharing Report helps clients to understand the value of any entitlement and is designed to provide a clear explanation of the options available and how these could affect each individual’s retirement income. This can ensure that pension assets are properly interpreted so that there are no misunderstandings.

Supporting you after a pension-sharing agreement has been reached

Once a pension-sharing arrangement has been agreed, a financial planner can provide ongoing support to help your client plan for the future.

For example, if a Pension Sharing Order is made and your client has been awarded part of their partner’s pension benefits as a “pension credit”, a financial planner can set up a pension to receive this credit, advise your client on how to invest it, and explain the options for drawing their pension in the most tax-efficient way.

During this potentially difficult and worrying time, a financial planner can support your client to make informed decisions based on facts and figures, rather than emotions, before, during, and after divorce.

Read more: Financial advice or financial planning? 6 ways the latter can benefit your clients

Get in touch

If your client would like to work with an experienced financial planner who takes the time to listen to their needs, we can help.

Please email us at or call 0345 505 3500.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow planning.