Divorce and Pensions

sprogs

I am nearly divorced - just the final financial bits to 'agree' :rotfl:

Yesterday I was doing that really dangerous thing of trying to get as much info as possible from the internet rather than via my £200 an hour solicitor and came across lots of sites that said if you have an ex that has a 'uniformed service' pension you should get an additional valuation done. Obviously this comes with a price tag of a minimum of £25 which from what I can gather will give you an indication of whether it is worth getting a full report that is in the region of £500.

At the moment as the property is worth more than the pension it is looking like I will have to buy ex out, but if the pension value is not accurate the tables could be turned.

Anyone have any experience of this?

tawl_2

no experience of this but this is my understanding:

- you normally get a CETV (transfer value) which represents the value of the pension from the scheme administrator;
- however there are other possible ways to value such pensions;
- those reports you mentioned you mention 'consider' those other ways and a higher value can therefore be placed on the pensions which seems acceptable on divorce sharing;

Those reports exploit the fact that a CETV assumes that the member has left service so in the courts eye might not reflect the true rights and there may be other ways of 'placing a value on a pension benefit'. Therefore it would be only advantageous if you want to increase the value of the pensions and it works in your favour (?)

Viper_7

Just been through this.
Yes you need to find the CETV and that is included as an asset.
I also went down the route of buying the ex out.

Look at consent orders and ensure either party doesn't have a claim off the other in the future regarding inheritance/pensions/lottery wins etc.

Just ring them up, and say you want the CETV and they will send it to you in the post.
There will be a charge if you cash it in - that will be explained in the letter also.
Depending on what your pension is in, it might be lower than you expected/was this time last year due to the stock market falls.

sprogs

I have the CETV for my ex's pension. My actual question is as he is an employee of one of the 999 services is it rtue that the actual value of this pension is likely to be more then on the CETV? this is the impression I got from 'googling' yesterday (bad habit, I know, am trying to wean myself off....)

sprogs

just bumping this up to try and get somemore replies!

Debt_Free_Chick

sprogs wrote: »

I have the CETV for my ex's pension. My actual question is as he is an employee of one of the 999 services is it rtue that the actual value of this pension is likely to be more then on the CETV? this is the impression I got from 'googling' yesterday (bad habit, I know, am trying to wean myself off....)

Not sure by what you mean as the "actual value" but it's irrelevant.

For the purpose of valuing pensions as an asset for divorce proceedings, the only value taken into account is the CETV.

sprogs

According to some websites uniformed service personnel who continue on service could retire early with an immediate pension. The value of this pension is significantly greater than that if they left service, as assumed by the CETV. Therefore the value for a uniformed service pension in a divorce can be significantly understated by the CETV.

So I am trying to find out if this is really true, or whether these are companies that are just after my money. I will run it past my solicitor next week, but if anybody has knowledge of this type of thing that is prepared to give me a little advice I would be grateful.

Debt_Free_Chick

sprogs wrote: »

According to some websites uniformed service personnel who continue on service could retire early with an immediate pension. The value of this pension is significantly greater than that if they left service, as assumed by the CETV. Therefore the value for a uniformed service pension in a divorce can be significantly understated by the CETV.

The law requires that pension rights are shared, using a CETV to value the pension that has built up, up to the date of divorce. You are only entitled to a share of the pension built up during your marriage - not a share of any future pension entitlement.

The CETV values the pension, including all rights and options that attach to it. It does not have to include any options that might be payable (usually described as discretionary benefits) - only those that will be.

I can't comment on what the sites you've looked at are trying to achieve - unless you want to post a link to one or two.

Is this guide from the Armed Forces Pension Scheme relevant (i.e. is this the scheme which provides your ex's pension)?

sprogs

this is the first one that comes up on Google, but there are several others that indicate that an actuary report is worth getting:

http://www.sharingpensions.co.uk/valuation_uniformed_services.htm

this is another:

http://www.ancillaryactuary.co.uk/home/2007/12/10/what-is-wrong-with-relying-on-cetvs-in-divorce-2-of-3.html

hope posting links here is ok.

they seem to be saying that the CETV could be wrong as in various uniformed services the person retires earlier with a full pension. In my ex's case they can retire at 55 on a full pension.

jamesd

"Allowing for pay increases up to retirement increasing final pensionable pay, as opposed to statutory increases in the CETV £51,000"

Speculation that in the future, after the marriage has ended and your contribution to it has also ended, there will be increases in pay greater than the statutory assumption. For a final salary scheme those could then increase the value of the past years in the scheme. I assume that the lawyer for your spouse is capable of assuming budget hardships and pay freezes for government employees following a recession. They are also capable of producing a speculative report that the high cost of government pensions will force future governments with spending difficulties to reduce accrued benefits, perhaps changing them from final salary to average salary basis. That could produce a substantial reduction compared to the CETV.

This one also assumes that the spouse with the pension never remarries and gives all of the speculative benefit of the supposed pay increases to the current spouse and none to any future spouse.

"Report assumes pension payable from age 50, not from 60 £48,000"

This one speculates that the CETV was calculated with a retirement age of 60 instead of 55. It also assumes that the scheme is required to pay out 100% of the pension value at 55 instead of reducing it as would normally happen.

"using latest mortality assumptions £12,000"

This assumes that the CETV was calculated assuming that people will live shorter lives on average than now expected. That is, it assumes that the actuary producing the CETV was incompetent.

The likely counter to this one is a calculation of the expected mortality age for the actual service your spouse is in, which can consider the effect of typical occupational disease and injury on life expectancy to provide a more accurate result than a generic calculation. Any existing injuries or illnesses, including individual factors from obesity to being a smoker, would also reduce the individual person's life expectancy and value of a pension.

"Other differences £15,000"

Nothing to say about this when there's no detail about what it is given.

sprogs wrote: »

At the moment as the property is worth more than the pension it is looking like I will have to buy ex out, but if the pension value is not accurate the tables could be turned.

Take great care here. Lets say that the pension is payable in 15 years. The house can be sold on the open market immediately. £100,000 of house that can be taken immediately is much more valuable than £100,000 of pension value that can't be touched for 15 years. Anyone getting the house can expect a significant increase in house valuation to allow for the lack of access to the money in the pension part, or a decrease in pension valuation to reflect the lack of access to that.

The difficulty here is the time value of money. A fair split really requires splitting both house and pension value and keeping each individual piece. Any time you don't do that one party is getting a greater benefit that has to be allowed for somehow.

There are also tax differences. A pension's income is taxable, the sale value of a private home isn't. So the capital value of a pension may be fine, but the effect of tax needs to be considered and that reduces the real after tax value of a pension compared to a house.

If your spouse's lawyer isn't doing this, you could end up unpleasantly surprised if you cause your spouse to do more research or get better advice.

Debt_Free_Chick

sprogs wrote: »

they seem to be saying that the CETV could be wrong as in various uniformed services the person retires earlier with a full pension. In my ex's case they can retire at 55 on a full pension.

If you want a bigger share of ex's pension i.e. using a different valuation, that has to be a matter for negotiation between you and your ex. You have no automatic right to it. Both those links - although they don't make this point clearly - are suggesting that you argue for a bigger share than the law entitles you to. If I'm being cynical, of course they're not being clear as they want you to contact them for more information

You are only entitled to a share based on the CETV. If you argue a bigger pension share, then your share of other assets will need to be reduced - it's a trade-off, as you have no entitlement to a bigger share of his pension. So, if everything starts off at 50/50 but you want 75% of his pension, then your share of any other assets will be reduced by the value of the extra pension you want.

As jamesd suggests, is a bigger pension share more important to you than anything else?