Excalibur Actuaries’ concerns about the way some defined benefit (DB) pensions are shared on divorce have been featured in Pensions Expert.
The article, “The next pensions scandal?”, looks at Excalibur’s analysis of external pension sharing arrangements, where a cash equivalent value is transferred out of a defined benefit (DB) scheme and into a defined contribution (DC) pension for the former spouse.
Our analysis suggests that divorcing spouses could be losing out by an average of around £33,000 under these arrangements, with women accounting for more than four in five of those disadvantaged.
Excalibur’s Richard Nobbs also highlights the difference in regulatory protection. DB pension transfers are generally subject to FCA regulation and should only be permitted where they can be shown to be in the member’s interest. Yet in cases of external sharing on divorce, the spouse can be forced to take a transfer out of the DB scheme.
Richard commented:
“However well-intentioned the regulations around pension sharing on divorce, in practice thousands of women are getting a bad deal.”
Richard has previously highlighted the inherent unfairness that can arise from external pension sharing in a letter published by The Guardian.
The Pensions Expert coverage also follows Excalibur’s recent submission to the Ministry of Justice consultation on reforming financial remedies on divorce, led by Richard, in which we set out recommendations aimed at delivering fairer pension outcomes.
Read Excalibur’s response to the Fair End to Relationships Consultation
Together, these form part of Excalibur’s ongoing work to highlight where the current pension sharing system can result in unequal outcomes and to press for a fairer approach.
Read the full article in Pensions Expert: “The next pensions scandal?”