How the law treats public sector pensions on divorce

This is partly due to public sector pensions being subjected to considerable reform and change in recent times.

This is partly due to public sector pensions being subjected to considerable reform and change in recent times.

The change

In 2015 the UK government introduced a seismic change by moving most public sector pension members from final salary schemes into less attractive career-average schemes.

These changes were applied across the board and impacted most public sector pension members retrospectively, not just new entrants to each individual scheme.

The fortunate few who were closer to retirement, were given transitional protection, and permitted to stay in their older, and more advantageous final salary legacy schemes, otherwise known as the “underpin”.

Some members were subjected to tapering, with a hybrid of their pension accrual remaining with the previous final salary legacy scheme and the rest moving across onto the reformed scheme.

However, the vast majority were moved entirely onto the new career average scheme whether they liked it or not.

The net effect of this change was that younger public sector workers, inevitably further away from retirement than their older counterparts, would have to work for longer in exchange for less pension entitlement when they eventually retired.

The overwhelming rhetoric from those employed in the public sector was that this was unfair and not what they signed up to.

Understandably, there was a swell of resentment at the government’s reforms.

This article was first published on the Financial Times Adviser on 18^th November 2024. The original article can be found at: https://www.ftadviser.com/ft-adviser/2024/11/18/how-the-law-treats-public-sector-pensions-on-divorce/