Divorcing Couples Left in Limbo Over Public Sector Pensions

28 June 2023

In March 2023, the HM Treasury suspended any calculation of a Cash Equivalent Transfer Value in respect of public sector Defined Benefit pension schemes and to date have not provided any firm details as to what will replace it. 

This sudden sea change in the calculation of public sector pensions has created uncertainty for divorcing couples across the UK with NHS staff, teachers, police officers, firefighters and armed forces personnel expected to be impacted soon unless changes are made.

A Cash Equivalent Transfer Value (CETV) is the mechanic which is used to measure the value of a Defined Benefit pension scheme.   If you wish to transfer a ‘Defined Benefit’ pension upon divorce, obtaining a CETV is considered a crucial first step. It is the key to unlocking public sector pensions and without it, it is impossible to know the value of a pension.

A ‘Defined Contribution’ pension does not require any formula or calculation for the purpose of transfer as the fund value and transfer value are one and the same.

How the Changes Impact Divorcing Couples

For those couples currently in the process of divorce, the lack of a suitable stopgap between the old CETV and new calculating ‘factors’ has led to a great deal of uncertainty.    Not only does the present position prolong an already emotional time for separating couples and their families, but it may also create an unnecessary financial burden and prevent couples the opportunity to simply move on with their lives.

It is hoped that the Treasury introduces the new calculation of CETVs sooner rather than later to spare any further stress for those divorcing couples currently left in limbo. 

It is important that any person going through a divorce or separation has a good understanding of their entitlement to a spouse’s pension or to the impact that any financial settlement may have upon their own pension benefit.  At Francis Hanna & Co, we are experienced in providing advice and assistance in relation to all aspects of matrimonial proceedings and can guide you through this process to help obtain the best result for you.

To speak to one of our solicitors about divorce and pension entitlement, contact us on info@fhanna.co.uk or call 028 9024 3901