11th August 2010

Family lawyers and divorcing couples are likely to experience delays in certain aspects of divorce financial settlement cases following Government proposals to link increases in public service pensions to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) as was previously the case.

The proposals, announced by Chancellor George Osborne in the Budget of June 2010, are anticipated to save pension schemes up to 10% in payments as it is expected that the CPI will be lower than the RPI measure of inflation.

Divorce and pensions specialist Ian Conlon, from Spence and Partners based in London, Belfast and Glasgow, told Professional Pensions.com that the plans will cause delays for divorcing couples who wish to obtain a pension sharing order or transfer value statement as part of their financial settlement on divorce.

He said that all Cash Equivalent Transfer Values (CETVs) will have to take into account the possible reduction in scheme payments and, as a result, many public sector pension schemes have stopped quoting CETVs for pension sharing orders on divorce.

Mr Conlon said that further delays would be likely until clear guidance is published.

"This is a very disappointing state of affairs," he said. "Peoples' lives move on and they should be able to sort out their affairs and I am afraid this is an unintended consequence of government pension policy."

Mr Conlon added that pursuing a divorce financial settlement was stressful enough "without a log-jam of cases building up while pensions' administrators, lawyers and actuaries debate the legal issues and amend software to deal with the changes."