HM Treasury is currently recalculating pension benefits for public sector employees. For teachers and NHS workers involved in divorce proceedings, this is creating significant delays in obtaining pension information in order complete necessary financial disclosures.
Associate solicitor, Louise Daniel, from WHN’s family law team, explains the reasons for the delays and why it is important to request this information as soon as possible as part of divorce proceedings.
Why have these issues arisen?
In March 2023, HM Treasury announced a suspension in the calculation of public sector pensions. This was promised to be resolved by summer, however workers in this sector who are involved in divorce proceedings are still experiencing delays.
Both the NHS and Teacher’s Pension schemes temporarily suspended any calculations of valuations while new ‘factors’ were provided by the government – for example, complex tables used to calculate the value of pensions. However, according to guidance published by HM Treasury on April 27, the suspension has ended although significant delays are still being experienced.
At present it is only teachers and NHS employees that are affected; however, it is anticipated the recalculations will thereafter roll out to cover the police, fire service and armed service personnel who are likely to see similar delays. Workers currently employed and workers who have already retired from the public sector are both affected by the delays.
The Teacher’s Pension website teacherspensions.co.uk states “The Department for Education launched its consultation on the retrospective remedy on March 27, 2023” and stated that part of this was “to address the discrimination in the 2015 reforms to the Teachers’ Pension Scheme and other public service pension schemes” and how it proposed this will be remedied.
The BBC News website reported on the ‘severe and drastic’ impact this is having on some couples as financial cases cannot resolve without this information.
Why is pension information required as part of a financial settlement in divorce?
When couples divorce, to resolve the associated financial side of their case, all assets (property, pensions, savings, and investments) and liabilities whether in the parties joint or sole names must be disclosed as part of the ‘matrimonial pot’, as well as incomes.
Pensions, in the same way as properties, will need to be valued. Requests must be made to each pension provider for an up-to-date Cash Equivalent Transfer Value (CETV). Only once the value of all assets and liabilities are clarified can consideration be given in relation to any form of financial settlement.
Dealing with pensions in divorce can be a complex area and often, particularly for workers with public service pensions, specialist advice and actuary reports are required to properly consider the values and benefits.
What can be done to help alleviate the delays?
If you work in the public sector and you may be potentially affected by this situation, you need to consider at the earliest stage to request the necessary information from your pension provider.
Even if divorcing spouses agree with how matters are to be dealt with in relation to financial matters, to obtain a financial clean break pension figures must be disclosed within the court documentation.
Based in our Haslingden office, Louise Daniel has strong expertise in all areas of family law, with specialisms in divorce, separation and financial cases. To seek further legal advice regarding the complex matter of pension calculations, please contact Louise on 01706 213 356 or by email: email@example.com