Teacher Pension Valuation for Divorce

BeenHereAWhileNewID

Hi there

I'm a long term poster but have decided to post this under a different ID.

I am currently in the process of getting divorced and we are trying to sort the finances.  I have a DC pension current fund is £124k and an old DB pension valued at £68k that will pay £1425 per annum with no additional benefits.  My STBX has 2 x teacher pensions (I'm not sure of the actual differences) the 'old one' was valued at £87k and will pay out £5700 per annum plus a £17k lump sum and the ongoing one valued early last year at £37k that will pay out £4100 per annum.  Both of the teacher pensions also have spousal pension attached.  I am 45 and STBX is 40 if that makes any difference.

On the face of it it looks like my pensions are worth more but I think the teacher pensions have been massively undervalued when you look at what they will pay out (and additional benefits) compared with what my tiny DB pension pays out?  

Does anyone here have any experience of independent valuations of these type of pensions?  My plan is to have an actuary produce a report but it would be great to hear of other peoples' views on it.  I'm pretty sure you couldn't buy an annuity for what the 2 teacher pensions have been valued at that would pay out anywhere near what they do each year?

Silvertabby

Are the teacher's pensions both TPS or another (private school) scheme?

If TPS, are the CETVs specifically for divorce purposes?  If so, then the valuation will be as at the date the calculation was run, and so has no real bearing on the member's own forecast.

If TPS, then any pension allocated to you would remain in the TPS scheme under your own name, as a pension credit member - and so is likely to give you a better return than an open market annuity.

BeenHereAWhileNewID

Silvertabby said:

Are the teacher's pensions both TPS or another (private school) scheme?

If TPS, are the CETVs specifically for divorce purposes?

Yes they are both TPS - I believe the change of scheme may have been to do with the change in role which meant a different pay scale.  Both CETVs were produced for divorce purposes as far as I am aware.

Silvertabby

BeenHereAWhileNewID said:

Silvertabby said:

Are the teacher's pensions both TPS or another (private school) scheme?

If TPS, are the CETVs specifically for divorce purposes?

Yes they are both TPS - I believe the change of scheme may have been to do with the change in role which meant a different pay scale.  Both CETVs were produced for divorce purposes as far as I am aware.

In that case, don't worry about buying an annuity.

If you are awarded some of your ex wife's pension, it will be as a %age and will give you your own TPS pension credit record.

For info, I couldn't begin to guess how many LGPS divorce CETVs I calculated in my 20 years - but I can say that less than 10%  went on to be actual pension sharing orders.

Usual thing seems to be that the value is just included as a marital asset, and offset against other assets.  I.e, you get 80% of the house, I get to keep all of my pension.

BeenHereAWhileNewID

Silvertabby said:

BeenHereAWhileNewID said:

Silvertabby said:

Are the teacher's pensions both TPS or another (private school) scheme?

If TPS, are the CETVs specifically for divorce purposes?

Yes they are both TPS - I believe the change of scheme may have been to do with the change in role which meant a different pay scale.  Both CETVs were produced for divorce purposes as far as I am aware.

In that case, don't worry about buying an annuity.

If you are awarded some of your ex wife's pension, it will be as a %age and will give you your own TPS pension credit record.

For info, I couldn't begin to guess how many LGPS divorce CETVs I calculated in my 20 years - but I can say that less than 10%  went on to be actual pension sharing orders.

Usual thing seems to be that the value is just included as a marital asset, and offset against other assets.  I.e, you get 80% of the house, I get to keep all of my pension.

I'm not planning to buy an annuity I was comparing the nearest available type of product to the TP to show how it may have been under-valued.  All I want is a fair outcome from the divorce and an equal potential pension at the point of divorce as my future provision is now likely to have to house me until I die as for various reasons the marital home will likely have to be sold and because of where I live and my age I will likely never be able to buy a suitable property to house my son and myself again.

Silvertabby

BeenHereAWhileNewID said:

Silvertabby said:

BeenHereAWhileNewID said:

Silvertabby said:

Are the teacher's pensions both TPS or another (private school) scheme?

If TPS, are the CETVs specifically for divorce purposes?

Yes they are both TPS - I believe the change of scheme may have been to do with the change in role which meant a different pay scale.  Both CETVs were produced for divorce purposes as far as I am aware.

In that case, don't worry about buying an annuity.

If you are awarded some of your ex wife's pension, it will be as a %age and will give you your own TPS pension credit record.

For info, I couldn't begin to guess how many LGPS divorce CETVs I calculated in my 20 years - but I can say that less than 10%  went on to be actual pension sharing orders.

Usual thing seems to be that the value is just included as a marital asset, and offset against other assets.  I.e, you get 80% of the house, I get to keep all of my pension.

I'm not planning to buy an annuity I was comparing the nearest available type of product to the TP to show how it may have been under-valued.  All I want is a fair outcome from the divorce and an equal potential pension at the point of divorce as my future provision is now likely to have to house me until I die as for various reasons the marital home will likely have to be sold and because of where I live and my age I will likely never be able to buy a suitable property to house my son and myself again.

You are right.  The most common complaint re the apparent undervaluation of public sector pensions is in relation to the LTA (lifetime allowance).  In the case of public sector pensions, that is still 20 X the annual pension, so an annual pension of £50,000 would still be within the limit - whereas a DC pension fund needed to buy a similar annuity would be nearer 2 million, and so well into tax territory.

I'm not aware of any plans to change this.