Pension schemes should reconsider their stance on charging divorce fees, Trafalgar House has said.

The Pensions and Lifetime Savings Association (PLSA) previously announced updated guidance on pension sharing on divorce, designed to be used by pension funds to support savers in their scheme.

The guidance also included a recommended range for schemes to charge members when providing information related to pension sharing orders on divorce.

The ranges were indicative only, and schemes can go higher or lower, however those ranges went up in this latest guidance, which Trafalgar House suggested raises an important ethical question.

Commenting on this, Trafalgar House client director, Daniel Taylor, said: “Pension sharing in divorce cases often involves complex calculations, particularly for defined benefit schemes.

“As an administrator, we understand first hand just how complicated these processes are – intricate pension value calculations, engaging with legal professionals, meeting legal requirements, and facilitating transfers.

“However, there are other exercises that are just as much work - such as partial transfers or pension increase exchange exercises – and members aren't asked to cover the costs for those.

Taylor pointed out that actually collecting these fees was often “very difficult”, one or both parties could refuse to pay, or simply cannot afford to, making the process “cumbersome” for schemes, and ultimately for members too.

“Some pension schemes have taken the bold step of waiving these fees altogether, others continue to pass the costs onto members – this does raise questions about fairness when another financial burden is being imposed on individuals during an already incredibly stressful time, and in a cost-of-living crisis,” he added.

“It may be time for schemes to reconsider their position on these fees and ask themselves if they are really comfortable with it.”

---