By David Connor, Director and Head of Family Law at WHN Solicitors.
If you’re going through a divorce and trying to work out what happens to pensions, you’ve probably found a lot of discussions surrounding “fairness” and “equal sharing” — but not many real pension sharing order examples showing what actually happens.
That’s the issue. Pensions are one of the most valuable assets in a marriage, often second only to the family home, and in some circumstances they can be more valuable. But unlike property, you can’t just sell a pension and split the proceeds as you wish. The rules are more complex than that, the valuations more technical, and the court process more nuanced.
Join us as we look at some noteworthy pension sharing order case examples — real couples, real pensions, real court decisions — and better understand how pension sharing orders work in practice.
McDonald v McDonald: When Does Your Pension Start Being “Marital Property”?
This Scottish case went all the way to the UK Supreme Court because it answered a question that had confused lawyers for years: if someone builds up a pension before marriage but keeps receiving it during the marriage, how much of it belongs to the marriage?
The situation: Mr McDonald was a former miner who joined the British Coal Staff Superannuation Scheme in December 1978. He got married in March 1985, then retired on ill-health grounds five months later in August 1985. As a result, he started receiving his pension immediately.
Twenty-five years later, when the couple separated in 2010, his pension was worth about £172k.
The Argument: Mr McDonald said only the five months of active contributions during the marriage counted — making the marital portion worth £10,002. Mrs McDonald argued that all pension membership during the marriage counted, even though he wasn’t actively contributing — making it worth £138,534.
The Ruling: The Supreme Court said that all forms of pension membership count, whether you’re actively paying in or already drawing benefits. If you’re a member of a pension scheme during the marriage, that entire period counts when calculating the marital share.
What This Means For You: If your spouse has been receiving a pension during your marriage, or has a deferred pension from a previous employer, don’t let them claim it doesn’t count as marital property. The McDonald ruling establishes that it does. The calculation uses the total membership period that overlaps with the marriage and not just the years they were actively paying in.
While Scotland has its own family law system, the Supreme Court’s ruling on pension membership has been widely adopted by English courts and remains a key precedent in pension sharing cases across the UK.
Standish v Standish: When £80 Million in Assets Stayed Non-Matrimonial
This highly publicised 2025 Supreme Court case is probably the most significant ruling on matrimonial property in 20 years. While it wasn’t exclusively about pensions, the principles apply directly to how pension wealth is treated, especially when one spouse has substantial pension assets built up before marriage.
The Situation: Mr Standish was a highly successful banker and CFO of UBS who retired in 2007 with significant wealth. He married Mrs Standish in 2005, having already accumulated the vast majority of his fortune. In 2017, he transferred £80 million in investment funds to his wife for inheritance tax planning purposes. The stated intention for this transaction was that she would put the money in a trust for their children.
However, this did not happen as planned and, when they divorced in 2020, Mrs Standish argued that these assets were hers. After all, they were in her name.
The ruling: The Supreme Court made five landmark findings:
- There’s a clear distinction between non-matrimonial and matrimonial property based on source, not whose name it is in.
- The sharing principle only applies to matrimonial property. Non-matrimonial assets should not be shared equally.
- Matrimonial property should normally be split equally as a starting point.
- Non-matrimonial property can become “matrimonialised”, but only if the couple actually treated it as shared over time.
- Tax planning transfers don’t automatically matrimonialise assets.
The court found that 75% of the transferred funds remained non-matrimonial. As a result, Mrs Standish’s award was reduced from £45 million to £25 million.
What This Means For Pension Sharing: If you or your spouse built up a substantial pension before marriage, it may be protected from equal sharing. The key question isn’t whose name the pension is in, but when and how it was accumulated.
This is particularly relevant for directors who built up executive pensions before marriage, people who worked for 20-30 years before marrying, or those who’ve transferred pensions between schemes during marriage for tax reasons.
The Standish principle says: moving a pension for tax efficiency doesn’t automatically make pre-marital pension wealth into marital property.
Martin-Dye v Martin-Dye: The Hidden Dangers of Pension Offsetting
Not every case is resolved with a pension sharing order. Many couples try to avoid the complexity by “offsetting”, where one person keeps their pension and the other takes more of the house or savings to compensate. This Court of Appeal case is the leading authority on why treating a pension as though it were interchangeable with cash can go wrong.
The Situation: Philip and Heather Martin-Dye both had pensions already in payment, and between them had enough to achieve a clean break. The court below divided the assets by treating the pensions in much the same way as the rest of the capital, setting them off against the other assets rather than sharing them directly.
The Problem: A pension is not the same kind of asset as money in the bank. As Thorpe LJ put it, a pension in payment is a whole-life income stream: it cannot be sold, it cannot be transferred, and it disappears on death. Setting it against realisable capital, pound for pound, treats two very different things as if they were equivalent.
The Outcome: The Court of Appeal allowed the appeal and imposed a pension sharing order. It held that failing to treat the pensions as different in kind from the other assets, without a significant adjustment to reflect that difference, was bound to lead to unfairness. By that stage the parties had spent over half a million pounds on the hearings below, much of it because the pensions had been valued and argued about on the wrong basis.
What this means for you: Offsetting is not wrong in itself, but it only works if the pension is valued properly and the comparison is genuinely like for like. The standard scheme valuation, the Cash Equivalent Transfer Value (CETV), frequently understates the real worth of a final salary (defined benefit) pension, especially with public sector schemes.
The guidance the courts rely on, the Pension Advisory Group’s Guide to the Treatment of Pensions on Divorce, is clear that a CETV can be a poor guide to true value and that a Pensions on Divorce Expert should be instructed where the figures matter.
If your spouse has a substantial defined benefit pension, you are usually better served by a pension sharing order, because you receive a share of the actual pension income, with its inflation protection and guarantees, rather than gambling that a lump sum or a larger slice of the house will keep pace with it.
Goyal v Goyal: The Offshore Pension Problem
Not every pension can be divided by a UK pension sharing order at all. This case settled the point that an overseas pension sits outside the reach of the English court’s sharing powers.
The Situation: After an eight-year marriage, the husband, a former city banker, had dissipated most of the couple’s assets through a spread-betting habit. By the time the finances reached court, the one asset of real value left was a pension annuity held in India.
The Problem: The wife needed a share of that Indian pension if she was to receive anything meaningful from the marriage. The question was whether the court had the power to make a pension sharing order against it.
The Outcome: Mostyn J held that it did not. The pension sharing power in section 24B of the Matrimonial Causes Act 1973 does not extend to a foreign pension, because a UK statute is not presumed to take effect over assets outside the jurisdiction. A pension sharing order can only be made against a UK-registered scheme.
What This Means For You: Before you negotiate over a pension, establish whether it can actually be shared. Overseas schemes, including those in Guernsey, the Isle of Man, Gibraltar and elsewhere, and some trust-based arrangements, generally fall outside a UK pension sharing order. Where that is the case, the pension is dealt with by offsetting instead, giving the other spouse a larger share of the assets that are within reach to compensate.
There is a narrow exception where there is compelling evidence that the foreign scheme would give effect to a sharing order, but you cannot assume it, and it needs to be investigated early rather than discovered late.
What These Cases Actually Tell Us
Looking across these cases, clear patterns emerge:
Timing Matters: The McDonald case confirmed that all pension membership during marriage counts. But Standish showed that pre-marital pension wealth can be protected. If your spouse accumulated most of their pension before marriage, they’ll likely keep a larger share.
Don’t Trust CETV Figures: Martin-Dye confirmed that a pension has to be treated as different in kind from other assets, and the Pension Advisory Group’s guidance warns that CETVs routinely understate defined benefit pensions. For any substantial defined benefit pension, you need an actuary to tell you what it’s really worth before you agree to offset it.
Pension Type Matters: Some pensions can’t be shared through a UK pension sharing order at all. Goyal confirmed that offshore pensions sit outside the court’s reach, so they have to be handled by offsetting. Before you start negotiating, understand what you’re actually dealing with.
How You’ve Treated Assets Matters More Than Whose Name They’re In: The Standish principle applies to pensions too. Tax planning moves don’t automatically matrimonialise pre-marital pension wealth, but consistently treating a pension as a shared family resource does.
Common Questions About Pension Sharing Orders
My spouse says their pension was earned before we married so I can’t touch it. Are they right?
Partially. The Standish case confirmed that pre-marital pension wealth isn’t automatically shared equally. However, you may still be entitled to some of it if your needs can’t be met from the marital assets alone. And if the pre-marital pension has been used as a family resource during marriage — for example, if pension income has funded family expenses — it might have become “matrimonialised.”
What if my spouse’s pension is in another country?
You can’t normally get a UK pension sharing order against an overseas pension. Goyal v Goyal confirmed that the court’s sharing power does not reach a foreign scheme. The court would instead look to compensate you by giving you more of the UK-based assets. This requires very careful negotiation about valuations and is likely much messier than pension sharing.
Can I take my share as a lump sum instead of a pension?
Usually no. When you receive a pension sharing order, you get pension benefits, not cash. You’d have your own pension which you couldn’t normally access until minimum pension age (currently 55, rising to 57). There are limited exceptions if you’re already over minimum pension age and the scheme rules allow it, but most pension sharing creates pension rights for you, not an immediate cash payout.
What if I don’t want a pension: can I just take extra money or keep the house instead?
Yes, this is offsetting. But Martin-Dye v Martin-Dye is a reminder of the risks: the courts treat a pension as a different kind of asset from cash or property, and a crude swap at face value can be unfair. You’re betting that your cash or house equity will grow as much as the pension would have. For substantial pensions, especially final salary schemes, offsetting usually means you lose out over time. It can make sense for smaller pensions or if you desperately need capital now, but it is risky for large pension pots.
Can pension sharing orders be changed later if the pension grows more than expected?
No. Once a pension sharing order is made and implemented, it is permanent. You can’t reopen it because the pension grew faster than expected, or because your circumstances changed. This is exactly why proper valuation at the time is crucial — you don’t get a second chance.
Why Getting This Right Matters
For couples in their 40s, 50s, and 60s going through divorce, pensions are often worth more than all other assets combined. A final salary pension earned over a 30-year career can easily be worth £500,000-£1,000,000 when properly valued.
The cases we’ve examined show that courts take pension division seriously. They look carefully at when pension wealth was earned, how it should be valued, whether it’s actually shareable, and what’s fair given the specific circumstances.
But they also show that there’s no simple “50/50 rule.” Pre-marital pension wealth can be protected, offsetting can fail spectacularly, and technical details about scheme types, overseas pensions, and public sector rules really matter.
At WHN Solicitors, we handle complex pension division cases regularly. We understand the difference between CETV valuations and actual pension worth. We know when you need an actuary. We can advise whether pension sharing or offsetting makes sense for your circumstances.
Don’t let pension sharing be an afterthought. These case examples show exactly why it matters — and why getting proper legal advice early can make a difference of tens or even hundreds of thousands of pounds to your financial future.
Contact our family law team to find out more about how we can help with pension division in your divorce.
- Call: 01706 232039
