Teachers’ Pensions: will legal action be taken over the transfer value delays?

A law firm is investigating whether legal action can be taken in relation to the transfer value delays with the Teachers’ Pension Scheme.

Hundreds of teachers are in limbo with their divorces due to long delays working out the value of their pension. Some have been waiting over a year, unable to get divorced without a cash equivalent transfer valuation (CETV).

Giuseppe Pingerna, senior associate in the family team at law firm Lester Aldridge, tells MoneyWeek: “The delays in Teachers' Pensions evaluating pension values are causing significant challenges for teachers undergoing divorce proceedings.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

“Without the crucial pension evaluation, courts cannot determine how pensions should be divided - pensions are often the second-largest asset after the family home. The current delays are causing emotional and financial distress, preventing settlements.”

Law firm Leigh Day is now looking at “a potential group claim concerning delays and maladministration in the calculation of CETVs for members of the Teachers' Pension Scheme”.

A note on the Leigh Day website says: “We believe that scheme members who have experienced a delay of three months or more may be entitled to compensation.”

What is happening with the Teachers’ Pension Scheme?

Valuing a defined benefit pension scheme is always tricky. The value of the pension depends on things like the age at which it is payable, how it is increased for inflation, how long it’s likely to be payable for, and so on.

But, things have become more complex for public sector pension schemes in recent years.

In 2023, the Treasury adjusted the "discount rate" applied to CETV calculations, which led to a pause in calculating valuations.

In addition, the “McCloud” judgment resulted in the government making changes to public service pension schemes, and calculating valuations in a new way.

Steve Webb, partner at pension consultants LCP, explains: “This means that valuing the pension when a divorce happens means working out two different valuations on different assumptions.

“Further delay has been caused by the reasonable desire of each of the public sector pensions schemes to take a consistent approach to all of this so that you don’t have divorcing teachers getting one figure and divorcing civil servants another figure for otherwise identical pensions.”

According to Leigh Day, as of August 2024, nearly 2,500 teachers were waiting for CETV calculations from Capita, which manages the Teachers’ Pension Scheme.

The BBC reports that the Department for Education said the figure had dropped to 1,344 as of 6 January 2025, but new cases were always coming in.

In an update issued on the Teachers' Pensions website last month, the scheme apologised for the delays. It said “the majority of delayed CETVs are forecast to be completed by February 2025”.

A Department for Education spokesperson said: “We understand the disruption this has had for some teachers and we are working closely with Teachers’ Pensions to resolve this issue as soon as possible. 

“Good progress has been made on reducing the number of outstanding Cash Equivalent Transfer Values since October and we expect the majority of cases will have been cleared in the coming months.”

Can legal action be taken?

Leigh Day says there could be a legal case for Teachers’ Pensions to answer. “Under the applicable pension regulations, CETV calculations must be provided within three months of a request, or six months in exceptional cases. The delays experienced by teachers constitute a breach of statutory obligations.”

It adds that members should be “fairly compensated for financial and emotional losses”.

The law firm also says that “these historic and ongoing delays may place Capita and the government in breach of the European Convention on Human Rights, in particular Article 8 (right to a family life) and Article 14 (discrimination)”.

MoneyWeek approached Leigh Day for an update on whether it would launch a legal claim, and was told that there should be an announcement shortly.

Natasha​​​​ Grande, head of family at Wilsons Solicitors, says some of her clients are impacted by the Teachers’ Pensions delays, and she knows of several firms investigating the CETV processing delays.

She adds that “the Armed Forces Pension Scheme has also announced they are going to experience delays until September 2025”. NHS staff have also been affected by delays in obtaining a CETV when getting divorced.

What else can public sector workers affected by pension delays do?

Complaints about pensions can be taken to the Pensions Ombudsman. This is a free and independent service that can help settle disputes.

Webb notes: “If someone suffered loss because of delays they could perhaps make a complaint of maladministration and this could ultimately go to an ombudsman, but the schemes might well argue that they have had an impossible job to do and have done their best; this is certainly the sort of work that you can’t just hire a few temporary staff to clear the backlog.”

He adds that while the delays have caused “an exceptionally distressing time for anyone needing a pension valuation in order to finalise a divorce settlement”, it sounds as though “things should be back to normal in the teachers’ scheme in a couple of months’ time”.

In terms of divorce proceedings, family lawyers caution against trying to push through a divorce without a CETV.

Grande comments: "The impact of [these delays] feeds the reluctance of some clients to obtain a pension share, due to the delays and cost, but it is vital that the parties and courts have accurate information regarding the value of the pensions, and for clients not to lose out on their entitlements.”

According to Pingerna, one alternative could be obtaining an independent valuation from an actuary, although he notes that this may not carry the same weight as the official Teachers' Pensions evaluation.

“Unfortunately, this creates a ‘chicken-and-egg’ situation, as the actuary will likely still require the official evaluation. However, an actuary specialising in these pensions may be able to expedite the process and reduce delays.”

He adds that during this limbo period, individuals “should seek emotional support from family, friends, and their divorce lawyer, who can provide tailored advice. Financial experts, such as qualified financial advisers, can also help manage uncertainty".