CETV Advice Please

Iwantmycetv

I'd appreciate your input.

I was quoted a CETV for my Defined Benefit pension scheme for divorce purposes. The CETV was then used in the financial settlement.

To summarise, the CETV plus the CETV of a defined contribution scheme and the fact that I am 8 years younger than my ex who is approaching retirement meant that we did not do a pension sharing order as it was deemed unnecessary. I do not work due to health issues but needed more money than offered so fought for monthly maintenance (long marriage fyi). I would have needed to take the case to court to get the court to resolve things but did not have the money to do so. I decided instead to accept the financial settlement, with the advice of a solicitor of course, and transfer my DB pension out to access the tax free lump sum to keep me going.

You will know what I am going to say now .... the IFA has recommended that I don't transfer out of the scheme.

I have been reading all your posts about DB pension transfers so know there is no one accepting these from an insistent client so I feel i've been duped as the CETV is good but I can't get to it.

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

IFA has said that the CETV isn't a real figure and shouldn't be used for financial planning .... unfortunately the legal law says it should be and that's what my settlement is based on!

I'm lucky as i've managed to buy a house outright but now need a new roof and a new car and to pay off credit cards ... which I was going to do with the £40K.

I realise from reading posts that no one is likely to recommend a transfer and no company will accept an insistent client ... i'm stuffed!

Just posting to see if what my IFA says about using CETV is true as it wasn't what my solicitor said.

Thanks for your time.

Dazed_and_C0nfused

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

There is not pot, you have a guaranteed pension.

Iwantmycetv

Dazed_and_C0nfused said:

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

There is not pot, you have a guaranteed pension.

So the CETV is not technically a valid figure?

Thrugelmir

Iwantmycetv said:

Dazed_and_C0nfused said:

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

There is not pot, you have a guaranteed pension.

So the CETV is not technically a valid figure?

For the purposes of your divorce a monetary value needed to be placed on the value of your pension. That's what the pension administrator provided. 

Whether giving up a secure inflation linked pension for life in exchange for a lump of cash is a very different matter. 

Silvertabby

A divorce CETV isn't necessarily the same as a transfer out CETV, as different factors/calculations are used.  If you really want to continue down this road, then you will need to obtain a transfer out CETV from your pension provider - and then reconsider if necessary.

Have you investigated accessing your DB pension now, on ill health grounds? 

Iwantmycetv

Silvertabby said:

A divorce CETV isn't necessarily the same as a transfer out CETV, as different factors/calculations are used.

Have you investigated accessing your DB pension now, on ill health grounds? 

Divorce CETV was £149K 2 years ago when divorce started and transfer value is now £161K but I assumed that was due to 2 years passing.

I have been granted pension early through ill health but it's not the actual income I need at the moment, it's the cash lump sum to pay for large expenses.

dunstonh

You will know what I am going to say now .... the IFA has recommended that I don't transfer out of the scheme.

Where the DB scheme does not give the option for the ex-spouse to hold their pension benefits within the DB scheme then it can be transferred without DB transfer permission requirements.  An insistent client would not occur because there is no choice and you dont need a DB transfer specialist to do it.

If the DB scheme give the option to give the spouse scheme membership of their share then it remains a DB pension and any later transfer would be subject to DB transfer rules and requirements.

Just posting to see if what my IFA says about using CETV is true as it wasn't what my solicitor said.

There is no pension pot with a DB scheme.  CETVs would not be used for financial planning.  The scheme benefits are used for financial planning (i.e. income, lump sum and death benefits, where applicable).   CETVs only become active on a pension transfer and you can only do a pension transfer if an IFA/FA believes it is in your best interests to do so (that is the commercial reality rather than the legal position).   Robbing your retirement fund to buy a car and roof repairs are unlikely to be justifiable reasons to transfer out of a DB scheme.

Linton

Perhaps the solicitor and the IFA are both correct.

See https://www.sharingpensions.co.uk/valuations.htm which suggests that the method for calculating CETVs for divorce purposes is different to that for transfering a pension because the situations are different.  

Silvertabby

Iwantmycetv said:

Silvertabby said:

A divorce CETV isn't necessarily the same as a transfer out CETV, as different factors/calculations are used.

Have you investigated accessing your DB pension now, on ill health grounds? 

Divorce CETV was £149K 2 years ago when divorce started and transfer value is now £161K but I assumed that was due to 2 years passing.

I have been granted pension early through ill health but it's not the actual income I need at the moment, it's the cash lump sum to pay for large expenses.

Does the ill health come with any extra benefits - ie, paid without any early payment reductions?  If so, you are even less likely to get transfer approval.

Does your pension scheme offer commutation?  That is, give up some of your annual pension in return for tax free cash (within HMRC limits).  If they do, then that should give you at least some of the cash you need 

2nd_time_buyer

One approach would be to take a mortgage out on your property. I belief that most lenders will take a paying out DB pension and maintenance as income streams. With interest rates as low as they are now and with a long term fix to mitigate risk this could well be a better solution financially than giving up the DB pension.

Iwantmycetv

2nd_time_buyer said:

One approach would be to take a mortgage out on your property. I belief that most lenders will take a paying out DB pension and maintenance as income streams. With interest rates as low as they are now and with a long term fix to mitigate risk this could well be a better solution financially than giving up the DB pension.

I am going to look at this option although I wouldn't need to do this if I could transfer the pension with the higher value.