Thousands of public sector workers are being denied information about the value of their pensions because the government has changed the rate at which it calculates public sector pension schemes. The changes are due to the government writing down their long-term GDP growth forecasts.
The problem will only affect current and ex-public sector workers who are in the process of getting a divorce.
How do I know if I have a public sector pension?
The public sector refers to the industries and jobs that the UK government operate or owns. Companies within the public sector usually don’t run on a for-profit basis and work to provide a service to the public, hence the name.
The NHS, police, fire service, schools and councils are all examples of public sector organisations.
Why do I need to know the CETV of my pension if I’m divorcing?
Divorce is the legal ending of your marriage. Your financial arrangements are formalised using a consent order, a legally-binding agreement reached between you and your spouse based on the value of your current assets.
To get a consent order, both parties must provide details of any property, savings, and pensions they have. If you have a public sector pension, the only way to determine its current value is to request a cash equivalent transfer value (CETV).
What if we aren’t splitting pensions as part of our financial settlement?
Even if you aren’t splitting pensions, you must disclose the value of your pensions so the court can decide if your clean break or consent order is fair.
Why has the public sector suspended CETV for divorcing couples?
HM Treasury has told public pension scheme administrators to suspend calculating CETVs until the Government Actuary’s Department determine the new actuarial factors. The work, which has no completion date, will leave thousands of people unable to transfer their pensions in the event of a divorce.
On Monday, we had emails from a couple of teachers who told us they couldn’t provide their pension figures because there was an embargo on the CETV from the Teacher’s Pension. I contacted Teacher’s Pension, who told me they cannot provide Cash Equivalent Transfer Values for financial divorce settlements until the new factors are received.
So far, the delay only affects teachers and those in the NHS pension scheme. But firefighters, the police and armed forces are likely to follow suit as they have also been told to suspend calculations by the government.
What impact does not having my CETV have on my divorce application?
Until the CETV is known, a settlement cannot be made, and the court cannot approve your consent order.
It is possible to divorce without agreeing on finances, but it’s risky, especially with pensions, because you will lose any entitlement to a widow/widower’s pension rights or benefits after completing the divorce.
What should I do if I can’t get my CETV?
The public sector temporarily suspended CETVs back in 2010. Then it took the government a couple of months to provide the new numbers needed to calculate the value of public sector pensions. Our advice to our clients is to give us all of their other financial details so that we can get their consent order documents ready without the CETV. This way, we can quickly update their consent order documents as soon as they receive their CETV and issue them to the court for approval, beating the inevitable rush and subsequent court backlog.
For the latest news on public sector pension valuations see our latest article here.