As Pension on Divorce Experts (PODEs), we have been asked on several occasions over the last few months how the current Covid-19 pandemic might impact on the production of pension sharing reports.
A couple of weeks ago, Mark ran a really useful webinar on this subject. You will find the link to a recording of the webinar at the bottom of this article.
As we see it, there have been two major issues caused by Covid-19 in relation to the production of pension sharing reports. These can be split into two headings: valuations and administration.
One of the features of the last two or three months has been the volatility of global stock markets. In late February and early March, we saw falls of around 30% in most major markets. Since then, we have seen a recovery in values, although most markets are still some way off their highs.
This volatility has meant that reports that were composed six or even three months ago are possibly out of date and need reviewing. However, this really only applies to cases where non-public sector pensions are being shared.
Broadly speaking, in cases where public sector pensions (e.g. AFPS, Police, NHS, Local Government and Teachers) are involved, these are by far the biggest schemes and there will be no need to get an updated report.
However, if there are significant money purchase assets involved (typically personal pensions or SIPPs that are commonly held with insurance companies like Standard Life or Prudential) then these types of arrangements could have fluctuated greatly in value over the last few months. As a result, there may be a need to refresh the data.
Whether you need to get an updated pension sharing report now would be down to how close the parties are to reaching a settlement. For example, it wouldn’t be worthwhile getting a report now for a case which is likely to drag on for another year.
The second area where valuations have been impacted is in the case of private sector final salary pension schemes (commonly provided by the banks, pharmaceutical companies and oil companies).
Rather counter-intuitively, we have seen the ‘cash equivalent’ (CE) values of these schemes rise over the last few months and these may well have an impact on the calculations – particularly if these can only be shared by an external transfer value. Certainly, we wouldn’t feel comfortable using a CE valuation that was more than six months old.
With many administration offices operating a ‘skeleton service’ at the moment, it is taking longer to get pension valuations from insurance companies and pension trustees.
Whilst we welcome the fact that many administrators have relaxed the rules on accepting copies of documents via email, it is still taking longer to get the information than usual. Therefore, you need to be realistic about the time frames when requesting a report.
Get in touch
Mark goes into greater detail about these issues in our latest webinar.
Watch the webinar here. You will need the access password: 1O@nf?38
If you would like to discuss a case, we’d love to hear from you. Email email@example.com or call us on 0118 987 6655.