Pension fears 'put divorce on hold'

Thousands of couples are putting divorce proceedings on hold because of uncertainty over public sector pensions sparked by the Government's controversial reforms, it was revealed today.

The current row is leaving couples going through divorce locked in a stalemate, as changes to the way pensions are calculated remain under dispute.

Unions representing millions of teachers, civil servants, NHS staff and council workers have been embroiled in a row with ministers all year over plans to increase pension contributions, extend the retirement age and cut payments.

A pensions adviser said the dispute was affecting divorces, with couples holding back from continuing with proceedings until they know how much pension they will receive after the dispute is resolved.

Courts require financial information before a divorce can be finalised and assets divided between husbands and wives.

It is a complicated process to calculate a so-called cash equivalent for pensions, as under a final salary scheme it depends on the number of years of service.

Fraser Smart, Managing Director of Buck Consultants, said: "In cases where individuals have a sizeable public sector pensions pot, we may find many are reluctant to move forward with divorce proceedings until there is certainty around the method of calculation, which could have a substantial impact on the cash equivalent transfer value and will affect the division of assets.

"According to our calculations, up to 31,000 public sector pensions holders could be getting divorced this year and we have been told couples are putting their divorce proceedings on hold as a result of the ongoing uncertainty on method of calculation.

"As we approach January, traditionally the month when divorce cases are filed, it is critical that some resolution is made that allows people to move forward during what is already an emotionally and financially draining time."

PA