In light of the Coronavirus outbreak, many questions are being asked about the various ways divorce proceedings may be impacted. One particular aspect to which consideration must be given is how pension assets should be approached and whether the current circumstances will affect them.
Unfortunately, the answer is not straightforward, as is often the case; it will be dependent upon the circumstances. Nonetheless, it is imperative that expert advice is sought.
There may be some practical difficulties that are encountered. Transfer values for each pension will need to be obtained as part of the initial financial disclosure process or updating values may be required during the case. It is quite likely that there may be delays in being provided with up-to-date valuations due to staff shortages and increased enquiries from concerned policy holders.
Similarly, financial advice is generally required to assist with the implementation of pension sharing orders once the division has been determined. As with many services under the current conditions, delays may be encountered when seeking such advice.
When assessing whether your financial settlement will potentially be affected, much will depend upon what outcome is being sought and whether the pension assets in question are likely to be subject to change. There will be some pension assets that will be directly affected by stock market fluctuations, such as defined contribution schemes. Others, such as public sector defined benefit schemes, may not be affected to the same extent as they may guarantee a certain level of income instead, ordinarily based on years of service.
If, for example, it is anticipated that you will share one pension equally, then a change in the value may have no impact as both parties will be affected proportionately; the agreement can proceed on that basis. Likewise, if it is only a public sector defined benefit scheme being shared, there may be no need to delay matters or alter the approach being taken.
On the other hand, if there are various pensions that will potentially be shared, such as a combination of public sector defined benefit scheme pensions and defined contribution schemes, then the settlement will almost certainly need to be revisited. If it is anticipated that defined contribution pension assets will be offset against other capital assets, such as equity in property, then up-to-date valuations may also be required. However, in light of the current volatility of the market, the updated values may not be valid for long.
It is not necessarily sensible to postpone matters until normality has resumed, particularly given the ongoing level of uncertainty. It is however, important to ensure that appropriate advice is obtained from the outset so that any potential changes to your pension assets are not overlooked and an appropriate strategy can be applied.