Pensions on Divorce: practical hurdles and the gender pension gap
Global
17.07.25
15’
The UK pension sharing system often results in poor outcomes for divorced women due to its complexity and low uptake. Practical issues like timing delays, unresponsive ex-spouses, and fluctuating pension credit values further complicate the process. Below, we explore these challenges, together with the key takeaways for those in charge of administering pension schemes. We have also sought the expert insights from ten other countries from around the world, included on the right hand-side of this page.
The current system for pension sharing has been operating in the UK for 25 years. Although it offers a clean break between the divorcing parties it is still the case that there is a gender pension gap whereby women in retirement generally have less pension than men. Divorced women appear to be particularly disadvantaged, as they have often not secured sufficient pension wealth at the point of the divorce. We set out below how pension sharing works and some of the complexities which may be resulting in poor outcomes for women, together with comments from otherjurisdictions to see how they treat pensions on divorce.
What is pension sharing?
Although pensions must be disclosed on divorce, and they are often the largest asset after the family home, the uptake in pension sharing is often low. This may be due to the complexity of the system and couples managing their own divorces without talking to a lawyer, especially since “no fault” divorce was introduced in the UK in 2022.
Pension sharing splits a pension arrangement between two parties following a divorce. It creates a “pension credit” (which is a specified percentage of the member’s “cash equivalent” rights) in favour of the ex-spouse and a “pension debit” against the member of the pension scheme. This gives rise to a number of practical issues.
Timing
Once the pension sharing order takes effect, the trustees of the scheme have four months to implement it, unless they haven’t received all the information required by the regulations.
The trustees need to keep the Pensions Regulator informed of any delays and request an extension if needed, otherwise they could be subject to fines.
Any delays could result in a complaint being made to the Pensions Ombudsman.
Unresponsive ex-spouses
Trustees are not obliged to give the ex-spouse rights within the same scheme as the member, and usually prefer not to as it can create complications.
Ideally, the ex-spouse will nominate a scheme or arrangement to receive their pension credit. But sometimes this doesn’t happen.
Whilst trustees can technically choose an external arrangement if one is not nominated, schemes are often reluctant to accept the transfer without consent from the ex-spouse.
Valuing the pension credit
There can be several months between the initialvaluation of benefits for the purposes of the courtand the actual implementationof the pension sharing order. The cash equivalent of the pension credit may therefore increase or reduce during this time.
Other potential complications
As pension sharing orders take time to sort out, members may be overpaid as their pension should be reduced from the date the order takes effect. Trustees can seek to recover overpayments.
Practical difficulties can also arise if, for example, the member or ex-spouse dies before the pension sharing order has been implemented, or where the scheme begins to wind up or enters the UK pensions lifeboat, the Pension Protection Fund.
Takeaways for those in charge of administering pension schemes
These are just some of the issues that can occur when implementing a pension sharing order in the UK. There are no current indications that the law on pension sharing on divorce is likely to be amended. So, until that happens, these practical problems will continue to cause issues for trustees and members alike.
Those administering pension schemes should consider the following steps to help ensure efficient implementation of pension sharing orders:
have an agreed process in place for implementing pension sharing orders to avoid any delays resulting in fines and/or member complaints;
review this process from time to time to ensure it remains “fit for purpose”;
communicate clearly with members and ex-spouses, including regular communications and follow-ups where appropriate; and
ensure administration procedures are designed to minimise the chance of overpayments and that they include a process for recovering any overpayments made.
Discover more about pensions in our Global HR Law Guide
In Belgium, occupational pensions are deemedto bepart of the common property to be splitondivorce. Even though that is clear fromBelgianmatrimonial law, there is no legal mechanism in place allowing the (former) spouses to agree and enforce a pension sharing arrangement. Occupational pension providers (insurance companies and pension funds) will only pay out to the original plan member and there is no way to enjoin them to payall or partof a pension to a former spouse. In practice, this means that in the context of a divorce, pensions are set off against other marital property or alimony. There have been talks about introducing pension sharing legislation, but this hasso farnever seen the light.
In a legislative opinion of8March 2023, trade unions and employers’ organisations came to the common position that pension sharing might have been a good solution for older generations, but is technically too complex to implement, and that for younger generations, it is no longer relevant as they tend to consider that pension rights are purely individual.
Under Chilean Civil Law, there is no obligation for one spouse to pay social security contributions on behalf of the other. Each former spouse is individually responsible for their own social security contributions, in accordance with their respective employment and pension status.
Following divorce, former spouses are no longer required to support or assist each other in all aspects of life, as is required during marriage (pursuant to Article 131 of the Civil Code). Each party becomes solely responsible for their own maintenance and welfare. There are, however, two exceptions to this:
Alimony: The spouse who was not at fault for the divorce may be entitled to receive alimony from the other, in accordance with the general rules (Article 174 of the Civil Code). In certain cases, alimony may include the payment of social security contributions if so ordered by the court, taking into account the needs of the recipient and the financial capacity of the payer. However, this is not automatic or general; it must be specifically requested and substantiated in court.
Economic compensation: If one spouse suffers a significant economic disadvantage as a result of taking primary responsibility for the care of any children or to household duties during the marriage, they may request economic compensation at the time of divorce. This compensation may be agreed upon in the form of money or other assets, but it does not entail the payment of future social security contributions. Its purpose is to address the financial imbalance resulting from the marriage and its dissolution.
In Colombia, the only scenario in which a spouse may be entitled to their partner’s pension is in the case of a survivor’s pension. The survivor’s pension is an economic benefit under the pension system granted to the family members of a deceased contributor or pensioner, with the aim of ensuring financial support. Importantly, divorce results in the surviving ex-spouse losing the right to claim the survivor’s pension that they might otherwise have received from their former spouse. Exceptions include where there has been a separation of assets, legal/de facto separation, or liquidation of the marital partnership, but the marital bond remains intact, and they can prove no less than five years of cohabitation with the deceased spouse before their passing. If the beneficiary is over 30 years old at the time of the contributor’s death, the survivor’s pension will be granted for life; if under 30, the pension will be granted on a temporary basis.
Finally, and in the case of successive relationships, if there is a divorce from the spouse and no cohabitation with them, and there is a permanent partner who meets the requirement of five years of continuous cohabitation prior to the pensioner’s death, the entire pension entitlement shall be granted to the permanent partner.
In Croatia, the approach to pension sharing on divorce differs from the UK system. The Croatian legal framework does not recognise pension sharing as a distinct legal mechanism. Instead, pensions may be treated as part of the matrimonial property, which is divided as a whole (either during or after divorce) in a separate dedicated process, assuming specific conditions are met.
As a rule, matrimonial property is divided equally (50/50) between the spouses, regardless of individual contributions, unless they have agreed otherwise. Under Croatian law, matrimonial property includes assets acquired through work during the marital union (which may not coincide with the full legal duration of the marriage) or assets derived from such work. Accordingly, pensions from the first, mandatory pillar (i.e. the state pension based on pay-as-you-go contributions) would not be considered matrimonial property. These pensions are not viewed as assets earned through work, but rather as a set of personal social security rights arising from compulsory pension insurance. In contrast, pensions from the second and third pillars (voluntary and supplementary pension schemes), which function as private savings mechanisms, are considered matrimonial property, as such contributions made during the marital union effectively increase the value of a spouse’s future pension and are treated similarly to wages or other income earned through work.
In Denmark, the treatment of pensions on divorce is based on an individualistic approach. Generally, pensions in Denmark are not part of the marital property unless explicitly agreed. This means that each spouse retains their own pension savings upon divorce unless the courts (in exceptional situations) find it unreasonable, e.g. where one spouse has foregone pension savings due to childcare or part-time work. In such cases, the courts may award a compensatory amount, but this is the exception rather than the rule.
Although Denmark is characterised by an employment rate for women that is only slightly lower than the employment rate for men (the difference is approximately 5%), said approach – while simple in structure – has drawn criticism for reinforcing the gender pension gap, particularly where one spouse (typically the woman) has accrued significantly less pension due to the traditional division of roles during marriage. Thus, women in the Danish labour market earn an average of approximately 12% less than men. Prenuptial agreements with pension sharing clauses are increasingly promoted as a tool to protect the financially weaker spouse, especially in cases where one party suspends or reduces their labour market participation due to childcare responsibilities.
In general, any initiative to equalisation is to be taken by spouses voluntarily, either beforehand or as part of the divorce process, or by involving the courts during the divorce process.
Under German law, namely the Pension Equalisation Act (Versorgungsausgleichsgesetz), pension sharing forms part of the wider divorce settlement process. The default method for sharing occupational/workplace pensions is referred to as “internal split”. Through this, the ex-spouse eligible for compensation is granted their own entitlement under the existing pension scheme of the other ex-spouse, whose own entitlement is reduced accordingly. For the employer, this usually creates an additional administrative burden, especially if the pension scheme is operated by the employer itself and not administrated through an external pension provider (e.g. an insurance company or pension fund).
An alternative process also exists in Germany, referred to as “external split”, whereby the pension credit awarded to the ex-spouse is transferred to an external provider. This can relieve the employer from additional future administrative responsibilities. However, and except for pension amounts that fall below a certain threshold, an external split requires the ex-spouse’s consent.
For employers that operate their own occupational pension scheme, a ruling by the German Federal Labour Court helpfully offers some legal certainty. Once a final decision has been issued by the family court on pension sharing, this is binding for the provider of an occupational pension and cannot be challenged. So, once the employer has properly implemented the family court’s decision, they do not need to worry about having to do it all over again.
Under Greek law, pension benefits are excluded from the division of marital property upon divorce. This framework contrasts markedly with the approach in the United Kingdom.
However, there is an exception that allows a divorced spouse to claim the pension of a deceased former spouse, provided certain strict conditions are met. These conditions require that the deceased was legally required to pay maintenance to the divorced spouse, the marriage lasted at least ten years until it officially ended, the divorced spouse was not at fault for the divorce, the divorced spouse’s average monthly taxable income does not exceed EUR 800, and both parties (the deceased, before their passing, and the divorced spouse) have not remarried or entered into a registered civil partnership.
This approach ensures that pension rights are preserved in cases where there was a significant marital commitment and genuine financial need posthumously.
Hungary currently has a mandatory state pension system. In the event of a divorce, spouses cannot split their pensions because pensions are not considered joint property. Each person is entitled to their ownpension.
However, if spouses entered into a voluntary pension contract in addition to the compulsory state pension scheme and paid contributions during this period, the value of the contract is considered joint property and must be considered when dividing assets.
Since 1 May 1995, pension sharing in the Netherlands has been governed by the Equalisation of Pension Rights in the Event of Divorce Act (“WVPS”), which provides thatanold-age pension accrued during a marriage or registered partnership is divided equally (50/50) upon separation, unless the ex-partners agree otherwise. The pension provider pays the equalised portion directly to the ex-partner if notified of the divorce within two years, but this portion is tied to the payment oftheparticipant’s pension and affected by their choices (e.g.whether they decide to retireearly or deferretirement). The WVPS does not apply to separations before May 1995 or to unmarried cohabitants. However, under the Dutch Pensions Act, ex-partners – including unmarried partners – may be entitled to survivor’s pension accrued up to the date of separation. As an alternative to equalisation, the WVPS also offers the option of conversion, granting the ex-partner an independent entitlement, unaffected by the participant’s decisions or death.If the divorce is not reported to the pension provider within two years, ex-partners must arrange the division themselves, often leading to legal and practical complications.
A recent evaluation of the WVPS foundthatit is still little known by citizens and divorce professionals and therefore underused. Because action is required by individuals(e.g. notifying the pension provider within two years), many fail to benefit from the law.Parallels can be drawn in this respect with the current UK framework, with uptake in pension sharing often low. Unlike the UK however, where there is no indication of a change to the law on pension sharing on divorce, alegislative proposalhas been advanced in the Netherlands. This wouldintroduce an automatic 50/50 division based on government divorce records and makeconversion the default. The legislation aims toreduce the burden on ex-partners and prevent complications as a result of missed notifications. The proposal iscurrently dormant, butexpected to take effect on 1 January 2028.
There is no legal procedure in Ukraine for dividing a pension after divorce.
During the marriage, the pension acquired is treated as the joint property of the spouses. In the event of divorce, the spouses may divide the pension only if it is a joint monetary savings account. Otherwise, each party continues to receive their pension independently of the other, regardless of the amount, and has no obligation to pay a percentage amount to the other party. This is due to the fact that a pension is a person’s income and after the divorce, the rules of jointly acquired property do not apply to it.
Ukrainian legislation does, however, provide for the deduction of a pension to one spouse in the event of the other’s death. This is called a survivor’s pension and it is provided to spouses who are disabled in the amount of 50% of the deceased person’s pension. The surviving spouse may receive the pension as long as they are unable to work or for the rest of their life if they have reached retirement age.
Michaela is a partner at Sackers and has many years’ experience on a wide range of pensions issues. Within Ius Laboris she chairs the Pensions Expert Group.
Insights
Pensions on Divorce: practical hurdles and the gender pension gap
The current system for pension sharing has been operating in the UK for 25 years. Although it offers a clean break between the divorcing parties it is still the case that there is a gender pension gap whereby women in retirement generally have less pension than men. Divorced women appear to be particularly disadvantaged, as they have often not secured sufficient pension wealth at the point of the divorce. We set out below how pension sharing works and some of the complexities which may be resulting in poor outcomes for women, together with comments from other jurisdictions to see how they treat pensions on divorce.
What is pension sharing?
Although pensions must be disclosed on divorce, and they are often the largest asset after the family home, the uptake in pension sharing is often low. This may be due to the complexity of the system and couples managing their own divorces without talking to a lawyer, especially since “no fault” divorce was introduced in the UK in 2022.
Pension sharing splits a pension arrangement between two parties following a divorce. It creates a “pension credit” (which is a specified percentage of the member’s “cash equivalent” rights) in favour of the ex-spouse and a “pension debit” against the member of the pension scheme. This gives rise to a number of practical issues.
Timing
Unresponsive ex-spouses
Valuing the pension credit
There can be several months between the initial valuation of benefits for the purposes of the court and the actual implementation of the pension sharing order. The cash equivalent of the pension credit may therefore increase or reduce during this time.
Other potential complications
Takeaways for those in charge of administering pension schemes
These are just some of the issues that can occur when implementing a pension sharing order in the UK. There are no current indications that the law on pension sharing on divorce is likely to be amended. So, until that happens, these practical problems will continue to cause issues for trustees and members alike.
Those administering pension schemes should consider the following steps to help ensure efficient implementation of pension sharing orders:
Discover more about pensions in our Global HR Law Guide
The view from other places.
Bahtijarević & Krka →