Pensions and divorce

In common law jurisdictions — particularly England and Wales, the United States, and Canada — pensions are generally regarded as part of the marital estate.

This means that:

• Pension rights accrued during the marriage are usually considered joint assets
• It does not matter whose name the pension is in
• The court focuses on fairness rather than ownership

Why are pensions treated as marital property?

The logic is simple:

Marriage is viewed as an economic partnership.

If one spouse worked full-time and built pension rights while the other spouse:

• reduced working hours
• stayed home to raise children
• supported the household
• relocated internationally

then both contributed to the accumulation of those pension rights — even if only one made the financial contributions.

As a result, courts aim to prevent one spouse from entering retirement with security while the other faces financial vulnerability.

Example under common law

A husband contributes to a workplace pension for 20 years.
The couple were married for 15 of those years.

In most common law jurisdictions:

• The portion accrued during the marriage can be divided
• The pre-marital portion may remain personal
• The court will consider equality or fairness

This principle applies regardless of gender.

French law adopts a fundamentally different philosophy.

Under French civil law:

– Pension rights are considered strictly personal rights
– They are attached to the individual’s professional activity
– They are not considered divisible marital property

In other words:

• You cannot “transfer” pension rights to your former spouse
• You cannot receive a percentage of your ex-spouse’s pension
• The pension remains legally owned by the person who earned it

This applies even when the spouses were married under a community property regime.

Why this approach?

French law views pension rights as:

• deferred personal income
• linked to professional contributions
• dependent on social security systems

Because they are not immediately liquid and depend on future conditions, they are excluded from asset division.

This is one of the biggest cultural differences between French law and common law systems.

“What if I stopped working and now have no pension?”

Under common law

Courts directly address this inequality by:

• sharing pension rights
• offsetting pension value with other assets
• awarding spousal maintenance

The goal is to ensure both spouses reach retirement with comparable security.

Under French law

Because pensions cannot be divided, French courts use a different mechanism:

– the prestation compensatoire

This compensatory payment is designed to offset:

• career sacrifices
• income disparity
• reduced retirement prospects

While it does not grant pension rights directly, it attempts to rebalance future economic inequality.

This is explored in detail in Section 3.

The consequences of these systems are enormous.

Under common law:

• Retirement assets are part of divorce negotiations
• Pension valuation is central to financial settlements
• Specialist pension experts are often involved

Under French law:

• Pension rights stay personal
• Compensation is indirect
• Future income is harder to equalise

This means that two identical couples may receive radically different outcomes depending solely on jurisdiction.

This is where many people encounter serious legal difficulties.

If one spouse has:

• a French pension
• a UK or US pension
• worked in several countries

then the question becomes:

Which court has jurisdiction — and which law applies?

The answer can dramatically affect:

• entitlement
• compensation
• retirement security
• long-term financial stability

This is why early legal advice is crucial.

Why legal advice matters

Pension rights are often overlooked until it is too late — sometimes years after divorce, when retirement approaches and financial inequality becomes irreversible.

Whether you are:

• divorcing in France
• divorcing under common law
• or involved in a cross-border situation

Professional guidance is essential.

Please contact our firm for expert advice and personalised assistance regarding pensions and divorce. We will help you understand your rights, protect your financial future, and navigate complex international legal systems with clarity and confidence.

Divorce often exposes economic inequality that developed gradually during the marriage.

Typical scenarios include:

• one spouse worked full time and accumulated strong pension rights
• the other worked part time or not at all
• one spouse relocated internationally multiple times
• one spouse prioritised family stability over career progression

Without compensation, divorce can result in one party approaching retirement with financial security while the other faces long-term vulnerability.

This is why most legal systems recognise that pension imbalance must be addressed — even if pensions themselves are not divisible.

In common law jurisdictions, courts have broad discretionary powers to achieve fairness.

– Spousal maintenance :

One of the most common tools is spousal maintenance (also called alimony or spousal support).

This may be:

• temporary
• long-term
• or in some cases lifelong

Courts consider:

• disparity of income
• loss of career opportunity
• age of spouses
• health
• retirement prospects

Maintenance can be particularly important when one spouse cannot realistically rebuild pension rights before retirement.

– Capital compensation and asset rebalancing:

Courts may also compensate pension inequality by reallocating assets, such as:

• awarding the family home
• transferring savings or investments
• adjusting property shares

The objective is not strict equality, but fairness in overall financial outcome — including future retirement income.

– Clean break philosophy:

Many common law systems aim, where possible, to achieve a clean break between former spouses. Pension sharing orders are often preferred because they allow both parties to become financially independent.

However, when pension sharing is not possible or appropriate, compensation mechanisms remain essential.

French law addresses post-divorce inequality primarily through one mechanism:

– La prestation compensatoire:

This payment is intended to compensate for the disparity in living conditions created by the divorce.

Importantly, it does not aim to equalise assets, but to correct unfair economic consequences of the marriage breakdown.

– What the prestation compensatoire considers:

French courts examine multiple factors, including:

• duration of the marriage
• age and health of the spouses
• professional qualifications
• career sacrifices
• current and future income
• foreseeable retirement conditions

Pension disparity is therefore considered indirectly, not mathematically.

– Form of the compensation:

In most cases, the prestation compensatoire is awarded as:

• a lump sum payment
• payable immediately or over a limited period

Life-long annuities are now exceptional and increasingly rare.

This reflects the French preference for financial finality after divorce.

– Limitations of this system:

While the prestation compensatoire provides flexibility, it also has limitations:

• no actuarial valuation of pensions
• no precise retirement income comparison
• significant judicial discretion

Two similar cases may therefore result in different outcomes depending on judicial assessment.

This uncertainty contrasts sharply with the technical precision often used in common law pension valuation.

In practice, it only partially does.

The prestation compensatoire may acknowledge:

• lost pension opportunities
• reduced retirement income
• long-term inequality

But it does not provide:

• actual pension rights
• survivor benefits
• independent retirement income streams

This is a crucial distinction.

While compensation can soften inequality, it does not reproduce the structural protection provided by pension sharing in common law systems.

Compensation mechanisms also differ significantly in tax treatment.

In many common law countries:

• spousal maintenance may have tax consequences
• enforcement mechanisms are well developed

In France:

• lump sum compensation is generally non-taxable for the recipient
• enforcement relies on civil execution mechanisms

These practical issues must be evaluated carefully during settlement negotiations.

Financial compensation often becomes the most disputed aspect of divorce because it involves:

• future projections
• subjective assessments
• emotional perceptions of fairness

Pension issues amplify this difficulty because the consequences may only appear decades later.

This is precisely why early legal advice is essential.

If you are concerned about your future financial security after divorce, particularly regarding retirement and pension rights, please contact our firm for tailored legal advice and strategic support.

We help clients understand compensation mechanisms and protect long-term financial stability.