Dividing Assets in Divorce: House or pension? (17 October 2025)

It is important to address the legal and financial considerations when deciding between retaining the family home or a share of pension assets in a separation. This is a challenge facing many couples and frequently divides people in what is important to them.

Serious consideration should be given to all the available options for dividing these assets, but ultimately vital to obtain both legal and financial advice to navigate these complex issues before making a decision.

In the following article, Duncan Lewis family law solicitor Tayyaba Ahmad sets out some of the key legal and financial considerations in a split.

The Family Home and Pensions: Key Assets in Divorce Settlements

Frequently, the division of financial assets during a divorce involves a choice between the family home and/or retaining pension assets. Pensions frequently represent the second largest asset after the family home. The decision to prioritise one over the other has significant financial and tax implications, particularly for those who may face unique challenges in securing long-term financial stability post-divorce.

How to Divide Pensions in Divorce

The court has the authority to redistribute pension benefits between divorcing parties. However, it is important to note that pension sharing orders are effective only after the final order in the divorce. Pensions can be divided through sharing orders, but you can also explore one party retaining more of the pension and there to be an ‘offset’ against other assets or an attachment orders. When offsetting one asset (or several other assets) against the retention of the pension pot, there may be some adjustment to the value of the pension verses more liquid assets, such as cash, shares or bonds. Pensions are usually ‘in the future’ assets so cannot be used to house parties or release cash now, if needed.

Divorce and Capital Gains Tax on the Family Home

Transfers of the family home however, if done between parties as part of a divorce settlement, are generally exempt from Capital Gains Tax if completed within a certain time frame from the separation, provided one party remains living in the property. This exemption can significantly impact the financial viability of retaining the home, particularly for those who may need to prioritise stability for children or other dependents.

Why Expert Financial Advice Matters in Divorce Settlements

Dividing pension rights and other assets in divorce settlements often requires specialist advice to address valuation, tax efficiency, and long-term financial planning. Forensic accountants and financial advisers can assist in valuing pensions, identifying tax-efficient options, and ensuring a fair settlement. For example, women approaching retirement age may benefit from exploring options such as flexible access drawdown or tax-free lump sums to secure their financial future.

Choosing Between the Family Home and Pension

Divorcing couples face a challenging decision between retaining the family home or securing a share of pension assets - while the family home offers immediate stability, particularly for those with dependents, pensions provide long-term financial security. The choice depends on individual circumstances, including tax implications, the value of assets, and future financial needs. It is essential to obtain professional financial advice to navigate these complexities and achieve a fair and sustainable settlement.

Contact Our Family Law Team

If you would like to know more or discuss your particular circumstances, please do not hesitate to get in touch with one of our specialist solicitors by email on: privatefamily@duncanlewis.com or by telephone: 020 7275 2676 

About Tayyaba Ahmad

Tayyaba Ahmad is a Solicitor in the Family Law Department at Duncan Lewis Solicitors, based in the City of London office and supervised by Director Mandeep Benning. She joined the firm in October 2023 after training at a leading Legal 500 City firm.

Tayyaba advises clients on divorce, financial remedy, and private children proceedings, with experience in child abduction, care matters, and protective injunctions. She is particularly skilled in supporting vulnerable individuals, including securing Non-Molestation and Occupation Orders.

About Duncan Lewis Family Law

Duncan Lewis’ Family and Child Care Department is ranked by The Legal 500 and Chambers and Partners for its nationwide expertise. The team advises on all aspects of family and matrimonial law, including divorce, domestic abuse, child abduction, and financial remedy matters. Many of our solicitors hold the Law Society’s Children Law and Family Law Advanced accreditations, providing skilled advocacy and a high level of client care throughout proceedings.