18/08/2026
PENSIONS ON DIVORCE : DO NOT OVERLOOK TOMORROW'S NEEDS WHEN ADDRESSING TODAY'S PRIORITIES
As family law specialists, we regularly see immediate housing needs take priority when couples negotiate a financial settlement on divorce.
Pension offsetting—where one person retains a greater share of non-pension assets, such as the family home, in exchange for giving up some or all of their claim against the other person’s pension—can appear attractive. It may provide stability and meet pressing housing needs, but its long-term effect must be considered carefully.
Pension Uk’s Retirement Living Standards help illustrate the importance of proper pension provision. Based on the research figures referred to, and assuming entitlement to the full UK State Pension, a single person may need a private pension pot of approximately:
🔹 £335,000 to £505,000 to achieve a “moderate” standard of living in retirement; and
🔹 £560,000 to £845,000 to achieve a “comfortable” standard of living in retirement.
These are estimates rather than fixed targets. The amount required will depend on individual circumstances, including retirement age, life expectancy, inflation, investment performance, housing costs and how pension benefits are accessed. Nevertheless, the figures demonstrate the potential long-term importance of pensions within a divorce settlement.
Offsetting may be appropriate in some cases. However, before giving up pension sharing to retain the family home or other assets, it is important to consider:
- likely income needs in retirement;
- whether there will be sufficient time and resources to rebuild pension provision;
- the tax treatment and accessibility of each asset;
- any valuable pension guarantees or other benefits;
- whether specialist pension or actuarial input is required; and
- the risk of becoming asset-rich but income-poor in later life.
Specialist family law advice is essential before agreeing how pensions should be treated on divorce. A family lawyer can explain the available options and their legal implications, as well as identify when advice from a pension expert or financial adviser may be needed.
A financial settlement should address not only immediate housing needs but also long-term financial security.
The family home may meet today’s needs—but a pension may be essential for tomorrow’s
The RLS are there to help people picture what lifestyle they expect in retirement and the costs associated with three different levels.