Pension Offsetting Calculator (UK)
Work out roughly how much cash or housing equity is equivalent to a share of a pension in a divorce settlement, and see the adjustments behind the figure.
Your details
The Cash Equivalent Transfer Value from the pension provider. Ask for it in writing — they must supply it, usually within three months.
The percentage a pension sharing order would have given you. Half is a common starting point, not a rule.
Most pensions cannot be touched before 55, rising to 57 in April 2028. Cash today is worth more than the same sum locked away for a decade.
Pension income is taxable; housing equity is not. A quarter of the pot is normally tax free, so only three quarters is affected.
Money you cannot spend, cannot borrow against and which depends on future investment returns is worth less than money in your hand. Commonly 10–25%.
Your results
Your figures appear here as you fill in your details.
This calculator is for educational purposes only and does not constitute financial or legal advice. Offsetting figures are negotiating positions, not settled law, and any figure produced here should be checked with a qualified financial adviser and your solicitor before you rely on it.
How this works
Offsetting means one of you keeps the pension and the other takes more of the house, the savings, or other capital instead. To do that you have to answer an awkward question: how much cash today is a share of a pension worth?
This tool makes three adjustments to the raw pension value, in order.
- Your share. The Cash Equivalent Transfer Value multiplied by the percentage you would otherwise have received through a pension sharing order.
- Tax. Pension income is taxable when you draw it; money from the sale of a house is not. A quarter of a defined contribution pot can normally be taken tax free, so we tax only the remaining three quarters at the rate you select.
- Waiting. Money you cannot access for years is worth less than money now. We discount by 2% a year above inflation for the number of years until you could draw it.
- Risk and inflexibility. A pension depends on future investment returns, cannot be borrowed against, and cannot be spent on a deposit next month. That is what the final discount represents.
The plausible range shows what happens when the last and most subjective of those adjustments moves 10 points in either direction. If someone has offered you a figure, the useful question is not whether it matches the number here, but whether it falls inside that band.
Assumptions
- A CETV can seriously understate a defined benefit pension. For final salary and public sector schemes — NHS, teachers, police, armed forces, local government — the transfer value may be 20–50% below what the benefits are actually worth. This tool starts from the CETV you enter, so if that figure is understated, everything here is too.
- The Pensions Advisory Group recommends a report from a Pension on Divorce Expert (PODE) for all public sector and defined benefit pensions, and generally where a CETV exceeds around £100,000. Those reports typically cost £1,500–£3,000 and are usually money well spent.
- The 25% tax-free element assumes a defined contribution pension and current rules. Defined benefit schemes work differently.
- The 2% real discount rate is a convention, not a fact. An actuary may use a different rate and reach a materially different figure.
- State Pension cannot be shared or offset in this way.
- No allowance is made for the Lifetime Allowance replacement rules, means-tested benefits, or the effect of the settlement on your tax position in any single year.
Last updated . Figures are UK-specific — check current rates on GOV.UK before acting.