Teacher pensions and divorce: the impact of valuation delays

Pensions are often the most valuable asset in a divorce, even over the matrimonial home. It's vital that they are factored into any financial settlement between the divorcing parties. But recently, pensions valuations for public sector pensions and in particular, Teachers Pensions, have been delayed by months, impacting on the time it takes couples to conclude their divorce.

Disclosing pensions on divorce

When a married couple comes to divorce, they need disclose their complete financial circumstances to the other so that they can reach a fair financial settlement. This includes pensions.

A Cash Equivalent Transfer Value (CETV) is used to attribute a value to pensions for divorce, but these require very complex calculations to be undertaken because pensions are based on contributions and investments, which are changing all the time.

Even once a CETV is produced, it is still only a snapshot in time for the purposes of negotiations. The real and true value of the pension won’t and can’t be known until the pension beneficiary retires. 

Teachers pensions

Unfortunately for those who hold public sector pension schemes, such as a teacher pension, the calculations are even more complicated because they are defined benefit.

Defined benefit pension schemes guarantee an income to the pension beneficiary on their retirement. Contrast this to defined contribution schemes, where there is no guaranteed income on retirement – the pension beneficiary will contribute towards the pension during their working life, that money will get invested, and their retirement income will depend on how well those investments do.

To add further complication, the Teachers’ Pensions Scheme stopped producing new CETVs between March and July 2023 because of a new calculation method that was required.

There was then further delay after this due to a court judgment known as McCloud which found that the Government had discriminated against younger public sector pension holders. This meant that remedial measures had to be taken and further changes to how public sector pensions were calculated. In some cases, the McCloud judgment has meant that not one but two CETVs need to be produced.

What do the delays mean for those who are getting divorced?

These delays have meant that those getting divorced who have a teachers pension could be looking at delays of months to obtain a CETV. During this time, they’ll be unable to finalise any financial settlement. Not only can this lead to emotional strain and increase acrimony between parties whilst they wait, it can have a very real financial impact on the parties.

For example, one party may still be living in the matrimonial home and paying the mortgage and outgoings pending final agreement. If the parties have issued proceedings in court, court hearings are likely to be postponed until the CETV is available and, in the meantime, legal fees may be accruing. 

Often, receipt of the CETV is only the start of the negotiation process as it is likely that the parties will then need to instruct a pensions on divorce expert to calculate how their pensions can be shared equally between them. Only after the relevant CETVs have been received can the parties start negotiating their final settlement.

The Teacher’s Pension Scheme did issue an update in December 2024 regarding the delays, and have stated that the majority of delayed CETVs are due to be completed by February 2025.

What can you do if you're getting divorced and have a public sector pension?

If you are getting a divorce and have a public sector pension, there are some things you can do to try and reduce the impact of the delay.

To minimise delay, request your CETV as soon as possible so that your request is lodged. Whilst you await your CETV, you can still engage in negotiations with your spouse.

For example, you could agree to disclose the rest of your financial circumstances and agree, in principle, to split the pensions equally once all CETVs are received.

Alternatively, you could ask your solicitors to down tools whilst you await your CETV so that you don’t unnecessarily incur any legal fees during this period. You can also take on the responsibility for chasing your pension provider to minimise costs during this time.

We are experts in dealing with pensions on divorce. If you would like to discuss your divorce and the financial implications of it further, contact one of our experts.

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