The Economic Challenge

The rises in the ‘cost of living’ have rarely been out of the news recently. Fuel costs both for the house and for the car have rocketed in recent months and the average weekly shop has gone up by 7%, or more, for certain items. Inflationary pressures are also affecting the average pay packet as pay rises fail to keep up with inflation now, let alone the threat of double-digit inflation by the Autumn.

How do Maintenance Orders adjust for Inflation?

In the light of all these financial pressures, if you have been through a divorce it may be worth checking the Maintenance Order. Why? Well, it is quite normal for Maintenance Orders to be index linked, so that your maintenance keeps pace with inflation, and you don’t find you are living off an ever-diminishing income.

In the past, the index linking was always linked to the Retail Price Index (RPI) but in recent years, with low interest rates, the Maintenance Orders tend to be linked to the Consumer Price Index (CPI) which excludes increases in the mortgage rate.

Adjusting for ‘Interesting Times’ 

We tend to get used to the economic circumstances around us and because inflation has been so low for many years and the days of 12% interest rates were apparently consigned to history, many couples have not bothered making sure that their Maintenance Orders have kept pace with inflation. In fact some may have forgotten that there was a provision for keeping up with inflationary changes built into their Maintenance Orders altogether.

It seems that the economic circumstances around us are now rapidly changing. We live in ‘interesting’ times and it seems that the era of stability across core economic indicators has gone for the time being.

With the spectre of growing inflation and rapidly increasing fuel bills it really is worth checking those indexation clauses in your Maintenance Order sooner rather than later.

Contact the family law team at rhw for a chat about how they can help you with a divorce or family law related matter. Call 01483 302000 or email family@rhw.co.uk