A recent article on the BBC website highlighted the difficulties faced by teachers in reaching a financial settlement following the issue of divorce proceedings, given the unconscionable delay in acquiring up to date valuations for their pensions. This firm has recently been involved in a case dealing with two teachers, one of whom paid the necessary fee for a valuation of his pension in October 2023. As of the date of this blog, he has still not received it.
Pensions & Divorce
It should be made clear however, that even if a financial settlement has not been finalised and agreed by the court. That in and of itself does not prevent the actual dissolution of a marriage.
The process of divorce itself and the negotiations of a financial settlement within those proceedings run separate from but parallel with each other. It is still possible to finalise your divorce without first getting an order from the court dealing with finances.
That said, we generally advise our clients to delay making any application for a final order of divorce until a financial settlement has been reached, because once the divorce has been granted, any interest one party may have in the other’s pension effectively crystallizes.
Most pension schemes (in particular those in the public sector in uniformed services) have generous spousal and death in service allowances. Once the final order in divorce is made, these benefits are lost. A financial settlement will take into account one spouse’s interest in the other’s pensions and deal with them. The risk that is taken by applying for the final order of divorce prior to the order being made is that if one party should die, the other will then lose those interests under the pensions and these can be substantial. However, there will be circumstances where clients, having been made aware of the risks they run, do nevertheless wish to see their marriage dissolved. This may be because they would wish to remarry or have other reasons to bring about the conclusion of their earlier relationship. Whilst this application can always be made, clients need to consider very carefully the impact that the dissolution of their marriage will have on a financial settlement, and ensure they fully understand them.
If you would like further advice, please give us a call on 01484 810210 and we will do our best to help.