Divorce and Pensions

sprogs

No, I don't necessarily want a share of the pension, I am hoping to give up my right to the pension in exchange for the house. That's why I am trying to work out whether the CETV is an accurate valuation or whether in reality it is likely to be worth more or even less, and getting very confused in the process! If we are looking at a 50/50 split then comparing the CETV value and the equity in the house assuming I take the house and give up the pension then I would be £15000 'better off'

sprogs

jamesd wrote: »

"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.

jamesd, thank you for taking the time to make things a little clearer! The bit above is the only part that I can comment on with any certainty. The calculation has been done assuming that member leaves the scheme immediately but with benefits not payable until the age of 60. In reality the full pension is definitely payable at age 55.

jamesd

Then that would increase the value of the pension.

But since the CETV assumes that the pension is tax free (all of it, not just 25%), you'd be setting yourself up for a reduction in pension value if you caused your former spouse to get better advice and argue that tax should be included as a factor.

In reality my guess is that the two would end up balancing each other out and it's not worth the argument.

The tougher argument that is worth having is how much value should be given to the ability to get the whole house value immediately but getting none of the pension value until 55. The longer it is until the pension can be taken, the greater the effective value of getting the house instead of waiting. If you want a fair value, £100,000 of pension value that you can't get at until you're 55 is worth a lot less than £100,00 of house that you can get at today. To illustrate that, consider the perfect fair split:

Sell the house at fair market value, each party gets 50% (or whatever the capital split is) and each party gets half of the pension as well. Then one party buys the house at the full fair market value.

If all that buying party has to pay for it is a pension that doesn't start for twenty years so they want to start repayments in twenty years the mortgage company will laugh at them. How hard they laugh is a measure of the extra value of having the house value immediately instead of waiting.

There is a standard way for dealing with this that an economist would use: one party sets the value, the other decides whether to take it or not. That gives an incentive to give a real value because if it's wrong the other person will take the other choice. It's the same reason you have one child cutting a cake and the other picking which piece to have.

If your former spouse is prepared to use 100% of the current CETV and compare it to 100% of the house market equity value, take the house and run before they wise up.

Debt_Free_Chick

sprogs wrote: »

In reality the full pension is definitely payable at age 55.

Will he meet all the criteria to get a full pension at 55? He must have 34 years reckonable service if an officer; otherwise 37 years and must not have left the Armed Forces.

sprogs

Debt_Free_Chick wrote: »

Will he meet all the criteria to get a full pension at 55? He must have 34 years reckonable service if an officer; otherwise 37 years and must not have left the Armed Forces.

Yep, full pension at 55!

MikeJones_2

I've only had a brief read of this thread but sprogs started by referring to her ex-partner being a member of one of the '999 services'.

Subsequent posts are referring to 'Armed Forces'.

It might make no difference at all, but is sprogs able to confirm which of the 999 service it is? I only draw attention to this given that (for example) the police pension scheme has quirks which others do not enjoy (and visa versa, such as MHO's in the NHS).

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.