What public sector employees need to know about their pensions on divorce

Divorce is rarely a smooth ride, and in the complex world of pension settlements, the recent McCloud judgment has thrown a hefty spanner in the works. Just Family Law is here to help you navigate this tricky terrain and understand how the McCloud ruling might impact your pension report and divorce settlement.  Here we aim to unravel the key points for divorcing couples grappling with this uncertainty.


Why is a public sector pension important in a divorce?


A public sector pension is a defined benefit scheme and has far more value than a pension of the same “pot” value that you could buy on the High Street from a financial provider with an annuity. They are often referred to as “Gold Plated” pension schemes.


The public sector divorce can be the most valuable asset in a marriage. It comprises many hidden benefits that could be lost by a divorcing spouse and non- member of the pension.

A longitudinal approach and fair sharing of pension income is increasingly considered by the court which will expect to see either equality of pension income on retirement, professionally calculated offsetting.


What is a pension sharing report?


Public sector pension reports are generally prepared by experienced actuaries who understand the complexities of the composition of your pension. They will explain the uncertain benefits within the scheme and the real pension value.  Usually, your spouse will insist on there being a jointly prepared actuarial report in cases where a public sector pension is one of the matrimonial assets.

The pension report will generally advise on how pensions will be shared to provide equality of pension income on retirement, what lump sums are available within the schemes. If you want to keep out pension intact, an actuary can report on the capital sum required to offset your spouse’s pension claims.


In 2021, the McCloud judgment highlighted unfairness in certain public sector pension schemes. Some members were disadvantaged by changes made in 2015, leading to legal challenges. Now, affected schemes are implementing retrospective adjustments, impacting pension values.


What does this mean for pension sharing in my divorce?

Here’s where things get tricky. Pension valuations in divorces often rely on estimated future benefits. With McCloud adjustments still unfolding, these estimates are become difficult to quantify and many individual public sector pension schemes are in the process of being reviewed. Pension valuations made prior to McCloud adjustments may be considered too unreliable by your spouse and they may wish to wait for the pension to be recalculated in the hope of benefitting from a pension pot at a higher value.

Key considerations for you:

  • Uncertainty: Until the full impact of McCloud is clear and the schemes are updated, it’s difficult to accurately value a public sector pension. The final pension values may not be available until late 2024 or later and this can lead to delays and disputes in divorce proceedings.
  • Retrospective changes: The McCloud remedy is retrospective, meaning it applies to past pension contributions potentially affecting existing pension sharing orders.
  • Second bite of the cherry? Some worry that ex-spouses who received a pension share based on the pre-McCloud value might benefit twice if the value later increases. This raises legal questions about fairness and potential adjustments.
  • Disclosure matters: Full and frank disclosure of all financial information, including the latest pension information, is crucial. You will need to know how your public sector pension is being adjusted under the McCloud ruling and

What should you do?

If you’re going through a divorce and have a public sector pension, it’s crucial to seek legal advice from a specialist family lawyer familiar with the McCloud judgment and its implications. Here are some key steps:

  • Full disclosure: Both parties must disclose all relevant information about their pensions, including any potential McCloud adjustments.
  • Seek information from your pension administrator about the timescale for providing the final pension value so that an agreement can be reached as to if the pension sharing report and divorce settlement should be delayed to await its outcome.
  • Seek expert advice: A qualified family lawyer can guide you through the complexities of McCloud and ensure your settlement is fair and reflects the latest legal landscape.
  • Consider alternatives: If valuing the pension is too uncertain and will take too long, you might explore alternative options such as delaying the pension agreement.

Contact Us: McCloud adds another layer of complexity to divorce settlements involving public sector pensions. Seeking expert legal advice is crucial to protect your interests and ensure a fair outcome for everyone involved. At Just Family Law we are always here to provide guidance and support throughout your divorce journey and provide expert advice on how your public sector pension will be treated in the divorce.


Book: an initial telephone consultation of up to 20 minutes or a longer hour’s advice meeting about your divorce and pension issues by emailing joannehouston@just-family-law.com 01962 217640

 Disclaimer: This blog post is for general informational purposes only and does not constitute legal advice. Please consult with a qualified family lawyer for specific guidance on your situation.


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