Pensions and Divorce – Public Sector Pensions – where is my CETV?
Posted August 6th, 2010
The Coalition Government’s emergency budget announced that public sector pensions will in future link to the consumer prices index (CPI) rather than its current basis, the retail prices index.
This has wide reaching implications, not only for those public sector workers currently going through divorce who are unable to get cash equivalent transfer values (CETVs) or implement their pension sharing orders, but potentially, all final salary pension schemes.
The implementation of the change has been set at 3 months but this is by no means guaranteed and there is likely to be a backlog of cases. This affects all of the public sector schemes including the NHS, Fire, Police, Armed Forces, Teachers and the Local Government Pension Scheme.
It is possible to still get divorced legally but the financial settlement will not be completed without agreeing the pension settlement.
The long term implications of the move are greater. The CPI is a lower measure than RPI and so the knock on effect will be that inevitably CETVs will be lower leading to lower pension settlements.
In addition, the private sector is likely to follow suit although this will take longer as they will need to consult with their pension members.
See my comments on this in The Guardian.
For more information on this issue, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
