Pensions reshuffle prolongs divorce agony

20th August 2010 at 01:00
Couples must wait as inflation-rate change holds up calculation of revised `retirement pots'

Hundreds of teachers hoping to put an end to their marriages may have to tolerate their spouses a little longer because public-sector pension reforms are causing delays to divorce proceedings.

The Teachers' Pension Scheme is denying teachers up-to-date calculations of the cash value of their retirement pots - vital information when splitting up a couple's assets - while the Government changes the way it links pensions to inflation.

The embargo on releasing "cash equivalent transfer values" (CETV) of pensions is already causing frustration among public-sector workers hoping to divorce quickly as no date has been set for the switch from the Retail Price Index (RPI) to the Consumer Price Index (CPI) to be completed.

Deirdre Cawthorne, a 54-year-old assistant head from Loughborough, Leicestershire, is going through an amicable divorce but is angry at delays to the process.

"You need to have the figure from both parties to be able to compare assets, so this must be affecting a lot of people," she said. "I asked for my CETV statement in April, even before the new Government came to power, but I am still not getting it.

"I'm at a bit of a loss. We can try and use the estimated income statement of the pension, but that is out of date and if this was a contested divorce, you couldn't do it at all. It's frustrating because no one seems to know when this situation is going to end and it leaves the financial part of the divorce in limbo."

Legal experts have warned that divorces can be impossible or risky without official pension calculations.

Heads' union the NAHT has confirmed that it has received several calls from members who are worried about how the change is affecting their divorce proceedings.

Sian Whittaker, a partner at Shortlands solicitors and a specialist in family law, said the figure was "fundamental" to the divorce process and the problem could affect many couples. "If the assets need to be split up quickly, you do not want to wait around," she said. Ms Whittaker said some couples hoping to reach amicable settlements could choose to make their own estimates of their pension values, but it was "never wise".

News of the divorce "log jam" comes just months after Chancellor George Osborne announced that public-sector pensions will now be linked to CPI rather than RPI.

Unions have warned that workers could have thousands of pounds wiped from their pensions over the course of their retirements if CPI is, on average, lower than RPI.

Russell Hobby, general secretary designate of the NAHT, said politicians needed to consider the "human consequences" of rushing through changes without consultation.

"There is a more serious impact of this change in that people will see a huge decline in their pension value," he added. "It is easy for politicians to forget the secondary consequences of seemingly technical changes."

This switch in inflation rates has rubbed salt into the wounds for thousands of teachers whose pensions are currently subject to a review by former Labour Cabinet minister Lord Hutton. Unions say the review is unnecessary for teachers as their scheme was recently scrutinised in 2007, when the retirement age was raised to 65 for all new entrants.

A Department for Education spokesperson said: "We are obliged to instruct the scheme administrator to temporarily suspend CETV activity outside of the public service pensions network. The only exception was if a case was in the final stage of completion when the suspension was announced. We are aware of some scheme members requiring this information but the suspension will remain in place until the CPI issues have been worked through."

  • Original headline: Pensions reshuffle prolongs the agony of divorce

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