Actuarial reduction on final salary pension

Good_bad_and_ugly
Good_bad_and_ugly Posts: 88 Forumite
edited 12 April 2015 at 9:31PM in MoneySaving dads
Message:

"Thank you to everyone who was able to help"

Comments

  • Finst
    Finst Posts: 146 Forumite
    edited 12 June 2014 at 11:38AM
    When the pension sharing order was granted, you will have been given a pension credit (basically, a pension), and your ex partner will have been given a pension debit (a negative pension). The pension credit and debit will have the same value, so if the court said he had to give you £100k from his pension, the credit will have been calculated to be worth +£100k and the debit will be worth -£100k.

    From then on, the credit and debit are completely separate - you can choose to retire at age 55, 60 or 65, and your credit will be adjusted upwards or downwards so that it keeps broadly the same value (the earlier you take it, the smaller the annual pension, but the overall expected value will be about the same)

    Your ex-partner will keep building up extra pension while (s)he works, and when (s)he chooses to retire, the debit will be deducted from his/her pension. But what you do with your pension credit will have no impact on that pension.

    In terms of your questions about dividing the value, if the PSO has already been granted, then its too late - the decision about how much to transfer from your ex to you has already happened.
  • Good_bad_and_ugly
    Good_bad_and_ugly Posts: 88 Forumite
    edited 12 April 2015 at 9:32PM
    Message:

    "Thank you to everyone who was able to help"
  • Finst
    Finst Posts: 146 Forumite
    That's not something I have any knowledge of I'm afraid - I guess you could try.

    My understanding is that when determining PSOs, courts tend to look at the share of value. For example, if you've agreed that a 50:50 split of all assets is reasonable, and you are keeping a house worth £100k, and your ex has a pension worth £300k, then you would get £100k from the pension so that you both end up with £200k of assets.

    But I could wrong on that - in particular I believe courts look at the needs of each individual - so if you can argue you need a greater proportion of the pension because you gave up your career? It's probably one to ask your solicitor.
  • :) Thank you.
  • theoretica
    theoretica Posts: 12,229
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    Why would equality of income at 55 give you a larger %? Because both of you would be taking actuarially reduced pensions at that age, wouldn't you?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • Good_bad_and_ugly
    Good_bad_and_ugly Posts: 88 Forumite
    edited 12 April 2015 at 9:32PM
    Message:

    "Thank you to everyone who was able to help"
  • theoretica
    theoretica Posts: 12,229
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    Forumite
    But regardless of the scheme rules and starting point for calculating reductions or enhamncements, if you have two people (of similar life expectancy) taking a pension at 55 to give the same pension you would need to divide the pot in half.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
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