CETV value

Silvertabby

wounded_panic said:

Silvertabby said:

leosayer said:

Marcon said:

leosayer said:

Is the calculation for a CETV the same as a valuation for a divorce pension sharing order?

Not quite sure what the question is - so my answer may not be a response to what you've actually asked. If so, apologies!

The CETV calculation is done twice: once at the time the order is made (and a %age split awarded) and then again at the time the order is implemented and actual payment of the transfer value is made.

My question, which could have been worded better, is whether the pension value provided by the administrator is different depending on whether the value is required for a transfer (ie. to give up the DB rights) or for a sharing order (where the DB rights may not be given up). 

A divorce CETV is just about the most complicated calculation in the world of DB pensions.  Even more so when the pension is already in payment, as seems to be the case here. 

In the case of a transfer CETV, the answer will be a one-liner in a letter, just giving the amount and the guarantee period.

In the case of a divorce CETV, the pension provider has to supply a Form E  (or equivalent) - an A4 sheet of so much more information than just a valuation figure.

Because of these extra complications, does that mean that the transfer CETV and divorce CETV will have different values?

Yes.  May not be by much, but different calculation =  different answer.

wounded_panic

shortseller09 said:

wounded_panic said:

If I am to transfer out some of the pension capital to the wife's pension scheme (say 50% = 380K) as part of the settlement, then I want as high a CETV as possible. This is because the part that remains in the DB scheme for me will generally be valued in a different way (ie it's not the other 380K). If we split the DB 50/50 I will end up giving a much higher proportion of the rest of our assets to wife. Either that or split pension 40/60 or even worse.

Sorry, can't follow that, can you clarify?

My understanding is that the part of the pension that remains in the DB scheme is valued for divorce purposes by using Galbraith tables (as a noob, I cant post the link but search for "mathieson consulting galbraith tables"). This method seeks to put a value on the DB pension that is different from the transfer value. Eg if this method values half the DB pension (that I will retain) as worth, say 500K and the wife gets 380K from the transfer, then I would need to pay her half the difference (in this case 60K) as part of the settlement.

Silvertabby

Albermarle said:

Silvertabby said:

wounded_panic said:

Marcon said:

GunJack said:

Rather than cetv, would it not be better for your scheme to split your membership with your (soon) ex-spouse? Surely less messy going forward

Not (usually) how it works on divorce. You're looking at the capital value of all assets, and simply doing as you suggest gives no idea of the underlying value of a DB pension.

Yes, I've asked the scheme if they will do pension earmarking (eg give both me and wife 24K). They seem reluctant to do this and anyway the payment to her stops on my death. Plus it doesnt give a 'clean break'.

That's not the way a pension earmarking order works.  Your pension provider can't just pay half of your pension to your wife - they would just continue to pay the full amount to you (as your taxable income).  You would then personally transfer the specified amount to your wife.

An earmarking order would make life much easier for your pension provider, as they wouldn't actually have to do anything - but they are right in warning you of the downsides.  ie, no clean break order and payments would cease on your death.

Earmarking orders were largely wiped out by the introduction of Pension Sharing Orders (PSOs) in which a %age of the benefits valuation are placed into a scheme under the recipients name, and are theirs for life.  
.

Some time ago I was looking at the Teachers Pension Scheme rules in this area on behalf of a friend, who potentially may have to get involved with a Pension sharing order.
If I remember correctly it was possible for the TPS to pay a regular pension directly to the divorced spouse of the pension holder, as part of a legal financial settlement between divorcing parties. I do not remember any mention of it going into a separate scheme. Although I could have read it wrongly.

In the case of PSOs in the public sector the 'gaining' spouse becomes a Pension Credit member of the scheme, with their own record.  Any rights to early payment aren't transferable, so the gaining spouse's pension would have an NRA of 65/SPA.  Public sector pension credit members can't transfer out so, yes, the wife in this case would eventually have received payment of her pension benefits direct from TPS.

Marcon

wounded_panic said:

Asimovs_nightfall said:

It all depends on how you negotiate your divorce.

The CETV provides a figure to put into the overall pot for divorce, but the reality could well be a % of the annual DB pension as part of a clean financial break. For example, if your DB pension was worth £48k p.a. then what would be a negotiated settlement that you and your ex would accept based on the pension?  Would it 60/40, or 50/50 or something else of this £48k p.a.  What would impact on this would be the split of other assets, the equity in the house, other savings etc.

It's a negotiation. 

You are right, it is a negotiation. As you have said, there are various ways of cutting the cake with the various assets we have. We are seeking to use financial mediation to come to something 'fair' . My main problem is even the mediators cant always agree on what 'fair' is!

This is very strange. Mediation is (normally) between the divorcing couple, with one neutral mediator facilitating (frequently with considerable success) reaching an agreement. Mediators don't usually mediate each other, let alone decide what 'fair' is - the whole point is that the people who are in disagreement have to agree that, helped by the neutral input of the mediator.

wounded_panic

Marcon said:

wounded_panic said:

Asimovs_nightfall said:

It all depends on how you negotiate your divorce.

The CETV provides a figure to put into the overall pot for divorce, but the reality could well be a % of the annual DB pension as part of a clean financial break. For example, if your DB pension was worth £48k p.a. then what would be a negotiated settlement that you and your ex would accept based on the pension?  Would it 60/40, or 50/50 or something else of this £48k p.a.  What would impact on this would be the split of other assets, the equity in the house, other savings etc.

It's a negotiation. 

You are right, it is a negotiation. As you have said, there are various ways of cutting the cake with the various assets we have. We are seeking to use financial mediation to come to something 'fair' . My main problem is even the mediators cant always agree on what 'fair' is!

This is very strange. Mediation is (normally) between the divorcing couple, with one neutral mediator facilitating (frequently with considerable success) reaching an agreement. Mediators don't usually mediate each other, let alone decide what 'fair' is - the whole point is that the people who are in disagreement have to agree that, helped by the neutral input of the mediator.

If party A says 50/50 share of the assets is fair but party B says it should be a 60/40 split, how does the mediator provide neutral input so that both parties end up in agreement?

Marcon

wounded_panic said:

Marcon said:

wounded_panic said:

Asimovs_nightfall said:

It all depends on how you negotiate your divorce.

The CETV provides a figure to put into the overall pot for divorce, but the reality could well be a % of the annual DB pension as part of a clean financial break. For example, if your DB pension was worth £48k p.a. then what would be a negotiated settlement that you and your ex would accept based on the pension?  Would it 60/40, or 50/50 or something else of this £48k p.a.  What would impact on this would be the split of other assets, the equity in the house, other savings etc.

It's a negotiation. 

You are right, it is a negotiation. As you have said, there are various ways of cutting the cake with the various assets we have. We are seeking to use financial mediation to come to something 'fair' . My main problem is even the mediators cant always agree on what 'fair' is!

This is very strange. Mediation is (normally) between the divorcing couple, with one neutral mediator facilitating (frequently with considerable success) reaching an agreement. Mediators don't usually mediate each other, let alone decide what 'fair' is - the whole point is that the people who are in disagreement have to agree that, helped by the neutral input of the mediator.

If party A says 50/50 share of the assets is fair but party B says it should be a 60/40 split, how does the mediator provide neutral input so that both parties end up in agreement?

That's precisely what the mediator is skilled in accomplishing - and what mediation is all about. I appreciate that sounds like a glib answer, but it's the reality of the situation.

How agreement is reached - and the majority of mediations do reach agreement - is invariably down to the skills of the mediator and the willingness of the parties to accept some sort of compromise is required from both parties. There's a reason the mediation often lasts for several hours, or in some cases rather longer...

Mason

Hi, when cetv values were around their highest I was offered what I thought was a very generous sum in return for 10k pa (age 55). I had to try very hard to persuade the pension consultant that it was worth my while. He grilled me and during that grilling said that if I was to buy the pension I was giving up I’d have to pay 20% more than the “generous” cetv.  I did persuade him to recommend but did have to give a few white lies such as needing the money before the DB pension became available (age 63). Given the decent returns I’ve enjoyed since it was probably the right decision but I’ll never be absolutely sure.

Hoenir

wounded_panic said:

Marcon said:

wounded_panic said:

Asimovs_nightfall said:

It all depends on how you negotiate your divorce.

The CETV provides a figure to put into the overall pot for divorce, but the reality could well be a % of the annual DB pension as part of a clean financial break. For example, if your DB pension was worth £48k p.a. then what would be a negotiated settlement that you and your ex would accept based on the pension?  Would it 60/40, or 50/50 or something else of this £48k p.a.  What would impact on this would be the split of other assets, the equity in the house, other savings etc.

It's a negotiation. 

You are right, it is a negotiation. As you have said, there are various ways of cutting the cake with the various assets we have. We are seeking to use financial mediation to come to something 'fair' . My main problem is even the mediators cant always agree on what 'fair' is!

This is very strange. Mediation is (normally) between the divorcing couple, with one neutral mediator facilitating (frequently with considerable success) reaching an agreement. Mediators don't usually mediate each other, let alone decide what 'fair' is - the whole point is that the people who are in disagreement have to agree that, helped by the neutral input of the mediator.

If party A says 50/50 share of the assets is fair but party B says it should be a 60/40 split, how does the mediator provide neutral input so that both parties end up in agreement?

50/50 is normally a starting point. By nudging the instransigent party to compromise a little.  Not always about money but other personal possessions. Also there maybe debts to be considered. 

Marcon

Not sure you've actually been to the first session with a mediator, so the information here might help: https://www.citizensadvice.org.uk/family/how-to-separate1/mediation-to-help-you-separate/

Albermarle

Silvertabby said:

Albermarle said:

Silvertabby said:

wounded_panic said:

Marcon said:

GunJack said:

Rather than cetv, would it not be better for your scheme to split your membership with your (soon) ex-spouse? Surely less messy going forward

Not (usually) how it works on divorce. You're looking at the capital value of all assets, and simply doing as you suggest gives no idea of the underlying value of a DB pension.

Yes, I've asked the scheme if they will do pension earmarking (eg give both me and wife 24K). They seem reluctant to do this and anyway the payment to her stops on my death. Plus it doesnt give a 'clean break'.

That's not the way a pension earmarking order works.  Your pension provider can't just pay half of your pension to your wife - they would just continue to pay the full amount to you (as your taxable income).  You would then personally transfer the specified amount to your wife.

An earmarking order would make life much easier for your pension provider, as they wouldn't actually have to do anything - but they are right in warning you of the downsides.  ie, no clean break order and payments would cease on your death.

Earmarking orders were largely wiped out by the introduction of Pension Sharing Orders (PSOs) in which a %age of the benefits valuation are placed into a scheme under the recipients name, and are theirs for life.  
.

Some time ago I was looking at the Teachers Pension Scheme rules in this area on behalf of a friend, who potentially may have to get involved with a Pension sharing order.
If I remember correctly it was possible for the TPS to pay a regular pension directly to the divorced spouse of the pension holder, as part of a legal financial settlement between divorcing parties. I do not remember any mention of it going into a separate scheme. Although I could have read it wrongly.

In the case of PSOs in the public sector the 'gaining' spouse becomes a Pension Credit member of the scheme, with their own record.  Any rights to early payment aren't transferable, so the gaining spouse's pension would have an NRA of 65/SPA.  Public sector pension credit members can't transfer out so, yes, the wife in this case would eventually have received payment of her pension benefits direct from TPS.

Thanks for clarifying that. In fact in this case the Teacher is the wife, and the gaining spouse would be over 65 already. They have similar other assets but as she has been a senior teacher for many years, her pension is a bigger than his DC pot as far as I can gauge from a distance anyway.