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Wednesday, Feb 05, 2025

Finance delays for divorcing teachers and NHS staff as pensions recalculated

Finance delays for divorcing teachers and NHS staff as pensions recalculated

Divorcing teachers and NHS staff face delays to their financial settlements while the Treasury recalculates public sector pensions.

Both current and retired staff are affected, risking a "severe and drastic" impact on thousands of divorcing couples, say solicitors.

One woman told BBC News she was not expecting the change and has been unable to move home.

The Treasury announced the delay in March, promising a solution by summer.

Although only teachers and NHS workers are currently affected, police officers, firefighters and armed forces personnel are expected to be next in line.

Louise Harris, 41, from Kesgrave in Ipswich, says the recalculation of the pension "cash equivalent transfer value" - or CETV - means her children are currently stuck in an unsuitable home.

"It's having a negative impact on my children and also my own mental health," the former teacher told BBC News.

"My family is having to live in a space that isn't suitable. It's unacceptable that this has been put in place unexpectedly."

When couples separate, they finalise their financial arrangements through a consent order - a legally-binding agreement reached between spouses based on the value of their current assets.

Both parties must provide details of any property, savings, and pensions they possess.

If they have a public sector pension, the only way to determine its current value is to request a cash equivalent transfer value (CETV).

In March, the NHS and teachers' pension schemes both temporarily suspended any calculation of CETV while they awaited new "factors" - complex mathematical tables used to calculate the value of pensions.


'Massive problem'


James Brien, from Easy Online Divorce, said the Treasury changes and subsequent delay was creating "a huge amount of unnecessary stress" for divorcing couples.

"It began with a couple of teachers who told us they couldn't provide their pension figures because there was an embargo.

"The phones have been ringing non-stop as more and more people have become aware of this massive problem.

"For most couples, pensions are the biggest asset they have after their home, so this delay creates a huge amount of unnecessary stress and uncertainty.

"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."

There are about 120,000 divorces a year; about 17% of employees work in the public sector.

HM Treasury says it announced changes to the way public sector pension CETVs should be calculated on 30 March.

"Following the announcement, the calculation of CETVs was temporarily suspended to allow time for guidance to be updated to reflect the change," say official background notes.

According to the document: "Guidance was published on 27 April 2023 by HM Treasury and the suspension has ended", but solicitors say they are still encountering delays, leaving thousands of divorcing couples unable to move on with their lives.

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