The Los Alamos hybrid simulation code is used to examine heating and the partition of dissipation energy at the perpendicular heliospheric termination shock in the presence of pickup ions. The simulations are one‐dimensional in space but three‐dimensional in field and velocity components, and are carried out for a range of values of pickup ion relative density. Results from the simulations show that because the solar wind ions are relatively cold upstream, the temperature of these ions is raised by a relatively larger factor than the temperature of the pickup ions. An analytic model for energy partition is developed on the basis of the Rankine‐Hugoniot relations and a polytropic energy equation. The polytropic index γ used in the Rankine‐Hugoniot relations is varied to improve agreement between the model and the simulations concerning the fraction of downstream heating in the pickup ions as well as the compression ratio at the shock. When the pickup ion density is less than 20%, the polytropic index is about 5/3, whereas for pickup ion densities greater than 20%, the polytropic index tends toward 2.2, suggesting a fundamental change in the character of the shock, as seen in the simulations, when the pickup ion density is large. The model and the simulations both indicate for the upstream parameters chosen for Voyager 2 conditions that the pickup ion density is about 25% and the pickup ions gain the larger share (approximately 90%) of the downstream thermal pressure, consistent with Voyager 2 observations near the shock.