We often experience delays in receiving Cash Equivalent Transfer Values (CETVs) from pension providers, particularly in relation to defined benefit schemes, such as NHS, Police pensions and Teachers’ Pension Schemes. Delays in pension CETVs result in significant delays to finalising divorce settlements.
Here, we explore the importance of pensions in divorce settlements and why it is important to request your pension CETV at the earliest opportunity, even in circumstances where pensions do not form part of your settlement.
Why are pensions relevant to divorce settlements?
Pensions can be one of the most significant assets to be considered during divorce proceedings, but they are often overlooked. The court has the power to make orders in respect of pensions on divorce, with the most common being a pension sharing order, which is an order that allows a percentage of one party’s pension to be transferred into a pension pot for the other. For information on the other orders that the court can make in respect of pensions and the alternatives to pension orders, please see Divorcing Couples Pensions l Financial Settlements l Nelsons Solicitors
What is a CETV, and why is it required for divorce?
A pension CETV is the estimated cash value of a pension if it were to be transferred out of a pension scheme. Your pension CETV forms part of your assets and must form part of your financial disclosure whether you are in court proceedings or attempting to negotiate a financial settlement with your spouse outside of the court process.
Without pension CETVs, it is impossible to have a full understanding of the assets in the case, which could lead to unfair settlements being reached. Depending on the type of pensions involved and their values, it may be necessary to instruct an expert known as an actuary or Pensions on Divorce Expert (PODE) to undertake calculations to determine how the pensions should be shared to achieve equal income for the parties on retirement. It is important to remember that whilst pension CETVs give an indication of the value of a pension, they do not reflect the benefits that can be derived from the scheme on retirement, which, in many cases, can only be calculated by an actuary.
What if I do not intend to divide pensions?
Even if you do not intend to divide pensions, their values may influence the division of other assets and allow parties to consider alternatives to pension sharing, such as offsetting (where one party receives a greater share of the capital in lieu of a pension share).
In some circumstances, spouses do not wish to engage in the exchange of financial disclosure and may have already reached an agreed divorce settlement, which does not include pension orders. Even in these situations, the court will expect both parties to disclose their pension CETVs, as it needs to assess the overall assets to determine whether the settlement reached is fair and should, therefore, be made legally binding.
What can be done to avoid delays in pension CETVs?
The process of obtaining a pension CETV for some defined benefit or final salary pension schemes generally takes around 3 months however, as highlighted in this article, delays are becoming more common.
In order to reduce delays, it is prudent to request CETVs for all of your pensions as soon as divorce proceedings are initiated. If you and your spouse have an amicable relationship, then you should encourage them to do the same. You can request your pension CETVs by completing and sending Form Ps to each of your pension providers or by simply making a request to them over the phone or via email. You can download a Form P from the Gov.uk website.
How Nelsons can help
If you are facing delays or need advice about pensions and divorce, our expert family law team is here to help. Contact us today for expert support and tailored guidance.
Julia Kolomiiets is an Associate in our expert Family Law team, which is ranked in Tier One in the independently researched publication, The Legal 500. Julia specialises in private family law, advising on separation and divorce, including financial settlements and arrangements for children, and domestic abuse.
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