Pension sharing CETV option for member on divorce

The_Doc

A friend is going through the divorce process and her DB pension is subject to a pension sharing of 50% of the CETV. The annual pension of £25K has a CETV of £1m. So the ex-spouse will get £0.5m to invest in an external pension scheme while the member is only being offered a smaller annual pension.

I assume the ex-spouse does not require an IFA to rcommend this as it is a legal order, but does the member have the right to request her split of the pension be offered to her as a % of the CETV, rather than as an annual income, without going through an IFA. In one way that would be fair as it would provide both with that option.

Marcon

The_Doc said:

A friend is going through the divorce process and her DB pension is subject to a pension sharing of 50% of the CETV. The annual pension of £25K has a CETV of £1m. So the ex-spouse will get £0.5m to invest in an external pension scheme while the member is only being offered a smaller annual pension.

I assume the ex-spouse does not require an IFA to rcommend this as it is a legal order, but does the member have the right to request her split of the pension be offered to her as a % of the CETV, rather than as an annual income, without going through an IFA. In one way that would be fair as it would provide both with that option.

The ex-spouse gets a %age of the CETV, as you rightly say (but bear in mind it will be a %age of the CETV will be finalised at the time of the court order - it won't be the same as the CETV at the start of the whole divorce process, because CETVs fluctuate). Many ex-spouses would be only too pleased to have the option of a guaranteed DB pension, but schemes will often not let the ex-spouse keep their pension debit in the scheme, so transferring out is the only option. 

The member's benefit which remains in the scheme will have a CETV of over £30,000 so a full regulated advice process would be required if they wished to transfer out.  

Silvertabby

Marcon said:

The_Doc said:

A friend is going through the divorce process and her DB pension is subject to a pension sharing of 50% of the CETV. The annual pension of £25K has a CETV of £1m. So the ex-spouse will get £0.5m to invest in an external pension scheme while the member is only being offered a smaller annual pension.

I assume the ex-spouse does not require an IFA to rcommend this as it is a legal order, but does the member have the right to request her split of the pension be offered to her as a % of the CETV, rather than as an annual income, without going through an IFA. In one way that would be fair as it would provide both with that option.

The ex-spouse gets a %age of the CETV, as you rightly say (but bear in mind it will be a %age of the CETV will be finalised at the time of the court order - it won't be the same as the CETV at the start of the whole divorce process, because CETVs fluctuate). Many ex-spouses would be only too pleased to have the option of a guaranteed DB pension, but schemes will often not let the ex-spouse keep their pension debit in the scheme, so transferring out is the only option. 

The member's benefit which remains in the scheme will have a CETV of over £30,000 so a full regulated advice process would be required if they wished to transfer out.  

And the transfer out CETV may not be the same as 50% of the divorce CETV, as different factors/calculations are used.