As mentioned in my previous article, the impact of Coronavirus is far-reaching and presents a unique challenge for individuals who are in the midst of a divorce and/or separation.
When couples look to try and resolve the issues of their finances on divorce, one of the aspects considered is that of pensions. Depending on the values involved (the first step is to ask the Pension Scheme for a Cash Equivalent Value (“CEV)), Pension Reports are more often than not obtained. This report on the party’s pensions considers possible outcomes depending on how they want to look to share them if they decide to share.
The Pension Sharing Orders available on divorce can achieve differing outcomes for couples, such as: sharing the Fund Values to achieve equality, sharing to achieve equality of income and offsetting.
In the current climate, with the Stock Market and FTSE (Financial Times Stock Exchange) falling in light of the pandemic, this has similarly affected the CEVs of Personal Pensions and Defined Contribution Schemes.
The fall in property values also affects SIPPS (Self-Invested Pension Schemes), for example, which hold property. At present, the RICS (the Royal Institute of Chartered Surveyors) are adding a declaration of “material value uncertainty” to Valuation Reports. This may cause issues for Pension Sharing Orders recently made if the Pension Trustees don’t want to implement the Order until the property is re-valued.
Guidance has been issued to Pension Trustees by the Pensions Regulator, (“the TPR”), which provides the priority must be to deal with those retiring and death claims. The knock-on effect is obtaining the Cash Equivalent Value of Pensions is not going to be treated as a priority, and it will mean that there could be significant delays in getting Pension information. Some Pension schemes have gone so far as to suspend providing this information entirely, such as the Armed Forces.
For now, values of Public Sector Schemes, such as those with the NHS and Civil Service haven’t changed as yet, but the basis on which they are valued could change in the future.
So, what if you’ve recently obtained a Pension Report? Should you review it?
The starting point is to ask the Pension Expert who prepared the report, and the answer will very much depend on when the parties are hoping to reach a settlement, the type of pensions involved and the outcome the parties hoped to achieve. (Whilst some schemes, as mentioned, will have seen a drop in the CEV, if the couple are looking to achieve equality of fund value then it will simply mean they will do so on lower values).
If the advice is to obtain an updated report, the problem many will face is the issue of getting updated information and CEVs.
The moral here is that pensions can be a very complex area on divorce, and this article highlights some of the additional matters that now need to be considered.
If you would like any further advice or assistance, please contact me for a 30 minute, no-obligation consultation.
Consultant Family Lawyer
DDI: 01865 955 476 / T: 0330 058 4012 / ext.2142