Is £1 of pension worth £1 of house in a divorce?

Usually not. A defined contribution pension pays a quarter tax free and the rest is taxed as income when drawn, and it can't be touched before the minimum pension age (55, 57 from April 2028). Drawn over 20 years on top of a full State Pension, £200,000 of pension leaves about £170,000 after income tax, or 85p for each £1, while £200,000 of equity in the main home is not taxed when the home is sold.

How much pension equals the house equity?

Enough that what's left after tax matches. In the example above, about £235,000 of pension leaves the same as £200,000 of home equity. The answer depends on the person's other retirement income, how quickly they draw it and where they pay tax.

What is offsetting a pension?

Keeping a pension and letting the other person have more of other assets, usually the home, instead of splitting the pension with a pension sharing order. The pension is often valued at its cash equivalent transfer value (CETV), which is a cash figure before tax.

Pension offsetting in a divorce: is a pension worth the same as the house?

When one of you keeps a pension and the other keeps more of the home, the pension is often counted at its transfer value, pound for pound. This shows what that pension is worth after income tax, when it can first be drawn, and how much pension it would take to equal the home equity offered for it. Your figures never leave your browser.

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Worked example

Computed when this page was built by the same engine that runs the calculator above, so the figures below and the live tool can never disagree. Change any input above to see your own.

Inputs
Pension (transfer value)	£200,000
Home equity offered for it	£200,000
Other retirement income	£12,548 a year
Drawn over	20 years, from age 50 now

Results
Pension after income tax	£170,088
For each £1 of pension	85p
Pension worth the same as the home equity	£235,191
Can first be drawn	age 57

The next question

What tax would the pension income pay? →Pension income tax calculator

Or answer it with everything else: the full Hundred Summers plan connects your pay, pensions, savings, property, tax and spending year by year, and stress-tests them across 500 simulated market histories.

Why a pound of pension isn't a pound of house

A defined contribution pension isn't cash. A quarter can come out tax free, up to the Lump Sum Allowance, and the rest is taxed as income when it's drawn, on top of the person's State Pension and any other income. Equity in the main home is not taxed when the home is sold. So £200,000 of pension, drawn over 20 years on top of a full State Pension, leaves about £170,000 after income tax: 85p for each £1. To leave the same as £200,000 of home equity takes about £235,000 of pension.

Locked until the minimum pension age

None of a pension can be drawn before the minimum pension age: 55, rising to 57 on 6 April 2028 except for members with a protected pension age. Home equity is there now, though it can only be spent by selling or borrowing against the home. Someone who needs money before then, to rehouse or to live on, may value the two very differently.

Offsetting or sharing

Offsetting keeps the pension whole and moves other assets the other way. A pension sharing order splits the pension itself: the scheme takes a share from one person's pension (a pension debit) and gives the other a pension in their own name (a pension credit). Each has its own costs and trade-offs, and a final salary pension's transfer value can understate or overstate what it really pays. Courts and pension-on-divorce experts weigh much more than tax: ages, needs, health and the other assets. This calculator shows one part of it, the tax, so the numbers being traded are like for like.

What it leaves out

Different growth on the pension and the home, the costs of owning a home, a final salary pension's guarantees and survivor benefits, inheritance tax, and the rules in Scotland, where only what was built up during the marriage is usually shared. Today's money, with today's tax bands held where they are.

In your plan

After a settlement, Hundred Summers projects what you keep (the pension, the home and your other savings) year by year, with your State Pension and spending, so you can see whether it pays for the life you want. The pension income tax calculator shows the tax on a year's pension income, and the tax-free lump sum calculator what the cash costs in income.

Education, not advice. An illustration of the income tax on a pension against the same sum of home equity, from UK tax rules; it does not say how assets should be divided. For your own settlement speak to a family solicitor or mediator, and for the pension a regulated adviser or a pension-on-divorce expert. For a personal recommendation speak to an FCA-regulated financial adviser; free guidance is available from MoneyHelper.

Sources

GOV.UK, Money and property when you divorce or separate: getting a financial agreement.
HMRC, PTM029000: divorce and pension benefits (pension debits and credits).
HMRC, Increasing normal minimum pension age; GOV.UK, Income Tax rates and bands; GOV.UK, Tax when you sell your home.