Pension reform scuppers January divorce drive

The government’s public sector pension reforms are causing public servants to put their divorce proceedings on hold as they wait for clarity on payouts, a consultant has said.

According to figures from Unite, as many as 12 million people are currently drawing a public sector pension, paying into one, or have paid into one in the past.

Buck Consultants estimates that 31,000 public sector workers want to begin divorces but cannot until they know for certain how their pensions will be accrued and paid out, the Press Association reports.

The government is currently negotiating with public sector unions over reforms that could include a shift from final salary to career average arrangements, employee contribution increases, later retirement dates and lower payouts.

During divorces, courts require all information relating to assets within a couple in order to divide them between the partners.

In final salary pension schemes, the process for calculating cash equivalents to divide between spouses is complicated as it is based on the number of years of service.

"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," said Fraser Smart, managing director of Buck Consultants.

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