CETV confusion NHS pension and divorce

bluedog77

Can anybody help explain some jargon please? Currently going through a divorce and my partner works for the NHS, I've received a CETV letter today confirming two CETV amounts, one of £370,000 for the 2005 scheme and one for £80000 for the 2015 scheme. Does CETV mean that's the amount they would get if they withdrew from the pension today, the mediator has indicated that I am entitled to claim half of the pension and I'm trying to work out how much I'm actually entitled to and if its a lump sum of half of the two combined amounts or whether it would be an annual pension payable to me at retirement age. Appreciate any advice.

Tammykitty

The CETV is the Cash Equivalent Transfer Value and is the amount your partner could transfer out of the scheme to a different scheme (although he would need specialist advice and a very definite reason for doing so)


The NHS pension scheme is a defined benefit scheme - so your partner gets a percentage of his annual salary each year as his pension.
For example if he has worked for 4 years in the NHS his pension will be 4/54 of his average salary (and 20 years, his pension will be 20/54 of his average salary) (Edit this is the 2015 scheme - the 2005 scheme is a % of final salary and possibly a lump sum - not up to date on it as much!)


So the CETV is the current value of the pension if he transferred it out to a private provider.
He cannot access this money until he is 55 (Might be 50).


The total CETV is the combined amount is £450,000, this is what his pension is currently worth, although it is unlikely he can actually access this (and unwise for him to do so if there is another way of splitting the money for divorce purposes)

bluedog77

Thanks - so If I am entitled to 50% of that total (£450,000) does it mean I'd be given it as a lump sum do you think?

Tom99

bluedog77 wrote: »

Thanks - so If I am entitled to 50% of that total (£450,000) does it mean I'd be given it as a lump sum do you think?

Assuming the £450k CETV has been correctly provided that means your partner has an asset with that value to put into the divorce pot.
To take this value into account when sharing out the joint assets you could for example have a bigger share of the house or cash assets.
Alternatively you can apply for a pension sharing order so that the capital value of your partners pension was split in accordance with the Court order.
If you obtained a sharing order of 50% you would then have a NHS pension pot of £225k.
You would need to look up exactly what you can do with that £225k
See here:
https://www.nhsbsa.nhs.uk/member-hub/divorce-or-dissolution-civil-partnership-and-your-pension

hyubh

bluedog77 wrote: »

Does CETV mean that's the amount they would get if they withdrew from the pension today

Sort of. Since the NHS is an unfunded public sector scheme, he/she isn't able to transfer out themselves to create a pot of money to invest, however CETV calculations are still needed to in divorce situations to put a figure on the pension value to split.

In practice, the typical scenario in a public sector scheme is that the ex-spouse would become a 'pension credit' member of the scheme, i.e. get a scheme pension, funded by debiting the pension accrual of the original member. To be honest, I don't know if the NHS scheme allows divorce transfers out, but even if it did, getting a scheme pension in your own right (as a 'pension credit' member) would likely be the better option.

One small thing - a pension credit membership will have its own terms, e.g. you wouldn't just inherit the normal pension age of the original pension (for example). Also, you won't be able to transfer in anything else to it.

the mediator has indicated that I am entitled to claim half of the pension and I'm trying to work out how much I'm actually entitled to and if its a lump sum of half of the two combined amounts or whether it would be an annual pension payable to me at retirement age. Appreciate any advice.

It's two amounts purely for the technicality that when a member of the 1995 section of the scheme moves into another section, it's counted as membership of two different schemes for tax purposes. There's no higher meaning to this - in the LGPS (for example), someone can have benefits roughly equivalent to the 1995, 2008 and 2015 sections of the NHS scheme yet still have them all count as membership of a single scheme.

Linton

It depends on what the settlement is. For example it could be that your partner keeps his/her pension and you keep the house were they of equal value. That could be easier than splitting every asset in half.


If your partner's pension is split I believe your bit will be transferred as a pension. Divorce isnt an easy way to extract cash from a pension.

crv1963

Your spouse has an asset worth 450k. All of the marital assets- your pension, any savings/ investments/ property equity are added up. Then provided the court agrees taking all of the circumstances of the into account the starting point will be to leave each with half the assets each.

There are factors like earning ability, needs of children and ages taken into account that then varies how it is all divided.

So although you may get 50% of the 450k pot as a starting point you may or may not get less depending on how the whole pot is divided.

If you get a % of the 450k it will be put into a new NHS pension for you as described by others above, it will then make you a scheme member and be accessible to you at your retirement age under the scheme rules- not at your soon to be ex retirement age. It will also cost you a fee to execute the pension sharing order if it is in your favour, not your ex.

mark5

It’s usually 50% of the pension from the marriage period, pension built up before the marriage doesn’t count.

hyubh

mark5 wrote: »

It’s usually 50% of the pension from the marriage period, pension built up before the marriage doesn’t count.

The last bit is Scottish law specific... in England & Wales that doesn't apply.

mark5

hyubh wrote: »

The last bit is Scottish law specific... in England & Wales that doesn't apply.

It’s what I got told my by my solicitor during my divorce, not Scotland.

hyubh

mark5 wrote: »

It’s what I got told my by my solicitor during my divorce, not Scotland.

It's probably the first thing a pension administrator new to processing divorce cases learns...

https://www.moneyadviceservice.org.uk/en/articles/dividing-pensions-on-divorce-or-dissolution