Estimating pension CETV for divorce purposes - public sector

Bob__M

I am supporting a relative who is going through a divorce and trying to help them get to an approximate understanding of the potential financial settlement.

The difficulty we need help with is how to quickly get approximate, current values for defined benefit, public sector pensions.  We are aware that we can request the pension providers to provide CETVs but we'd rather not go down that route at his stage for various reasons.  Both parties in the divorce are currently drawing their DB pensions but not their state pensions.

Looking on the forum I have seen mention of using current income multipliers of x20 for private DB pensions (just as with the LTA calculation) and x10 for public sector DB pensions.  Can anyone corroborate these multipliers for use in estimating the value of a DB pension for divorce??

It seems very odd to me that DB schemes could be valued so differently and indeed, given the  full index linking, I would expect the public sector multiple to be greater than the private sector multiplier; certainly not half!

I have also seen comment on the forum that "the calculations for a CETV for divorce purposes (at least in the public sector) differ from the calculations used for a transfer out".  I found a worked example for a teachers DB pension and the multipliers for divorce were x15 for a man and x 23 for a woman.  This is clearly better than x10 mentioned above and makes more sense. So does anyone know what the realistic range of valuation multipliers might be for a male (approx 61 yrs old) public sector pension valuation for divorce purposes? 

Unclefoobar

I asked a similar question recently which may help?

https://forums.moneysavingexpert.com/discussion/6493471/divorce-after-retirement#latest

Bob__M

Thanks.  I probably should have mentioned that my relatives aim is to offset their partner's pension value against their partner's share of the value of the house and not to obtain a pension sharing order.

Marcon

Bob__M said:

I am supporting a relative who is going through a divorce and trying to help them get to an approximate understanding of the potential financial settlement.

The difficulty we need help with is how to quickly get approximate, current values for defined benefit, public sector pensions.  We are aware that we can request the pension providers to provide CETVs but we'd rather not go down that route at his stage for various reasons.  Both parties in the divorce are currently drawing their DB pensions but not their state pensions.

Looking on the forum I have seen mention of using current income multipliers of x20 for private DB pensions (just as with the LTA calculation) and x10 for public sector DB pensions.  Can anyone corroborate these multipliers for use in estimating the value of a DB pension for divorce??

It seems very odd to me that DB schemes could be valued so differently and indeed, given the  full index linking, I would expect the public sector multiple to be greater than the private sector multiplier; certainly not half!

I have also seen comment on the forum that "the calculations for a CETV for divorce purposes (at least in the public sector) differ from the calculations used for a transfer out".  I found a worked example for a teachers DB pension and the multipliers for divorce were x15 for a man and x 23 for a woman.  This is clearly better than x10 mentioned above and makes more sense. So does anyone know what the realistic range of valuation multipliers might be for a male (approx 61 yrs old) public sector pension valuation for divorce purposes? 

The only way to get a realistic valuation is to ask the scheme for one, otherwise you're into guesswork territory...but if both parties are happy to go with such vagueness (which could substantially disadvantage one or the other), there's no law which says it has to be accurate.

hugheskevi

Your scheme may publish the assumptions and factors - the Civil Service scheme publishes them at this link.

Silvertabby

A DB CETV for divorce purposes is just about the most complicated calculation known to DB pension administrators.  Even more so once the pension is already in payment, due to the various factors used.

If a Court has asked for valuations, even if the intention is to offset the value(s) against other assets, then they are likely to insist on a Form E.  The only way to get this is to ask your pension provider for a Divorce CETV.

Albermarle

Looking on the forum I have seen mention of using current income multipliers of x20 for private DB pensions (just as with the LTA calculation) and x10 for public sector DB pensions.  Can anyone corroborate these multipliers for use in estimating the value of a DB pension for divorce??It seems very odd to me that DB schemes could be valued so differently and indeed, given the  full index linking, I would expect the public sector multiple to be greater than the private sector multiplier; certainly not half!

Your general logic that a DB multiplier for a Public sector pension should be higher is correct, and not sure where you got these figures from. In any case the 20X for private sector was just an arbritary figure for calculating other issues . 

However there are other complications in calculating these figures, as described by previous posters .

NedS

Maybe overly simplistic, but knowing the value of the accrued benefits to date (see most recent pension statement), you could use an Added Pension calculator to see how much it would cost to "purchase" (half of) those benefits. That, to me, would seem a more accurate number than an arbitrary x20 factor. How much would it cost me to repurchase the equivalent of half of my pension?

Marcon

Silvertabby said:

A DB CETV for divorce purposes is just about the most complicated calculation known to DB pension administrators.  Even more so once the pension is already in payment, due to the various factors used.

If a Court has asked for valuations, even if the intention is to offset the value(s) against other assets, then they are likely to insist on a Form E.  The only way to get this is to ask your pension provider for a Divorce CETV.

If the court hasn't asked for valuations, and the parties agree a split of assets and present it as an agreed settlement, then the court would need good reason to intervene to overturn that.

Albermarle

NedS said:

Maybe overly simplistic, but knowing the value of the accrued benefits to date (see most recent pension statement), you could use an Added Pension calculator to see how much it would cost to "purchase" (half of) those benefits. That, to me, would seem a more accurate number than an arbitrary x20 factor. How much would it cost me to repurchase the equivalent of half of my pension?

Also simplistic >

You could find out how much an annuity would cost to buy for a person of that age, with that income, and with similar terms and conditions. Then knock say 10 % off ( annuity providers profit margin) and then halve it.