Pension: 4.5 year age difference and 50/50 split

Eth4in

I'm getting divorced. I'm 49, and she is 44. There is a 4.5-year age difference. The mediator is pushing for a 50/50 split. Would the 4.5-year age difference impact the share calculation if we visited a specialist? i.e. the pot will continue to accrue over 4.5 years and she'll get more as a result at point of retirement, so maybe doesn't need quite so much now?

Also, what is the "rule of thumb" for how much cash is equivalent to how much pension? The mediator said an 85k pension is roughly equivalent to 55k cash, but I'm struggling to find anything on this on the internet. 

Marcon

Eth4in said:

I'm getting divorced. I'm 49, and she is 44. There is a 4.5-year age difference. The mediator is pushing for a 50/50 split. Would the 4.5-year age difference impact the share calculation if we visited a specialist? i.e. the pot will continue to accrue over 4.5 years and she'll get more as a result at point of retirement, so maybe doesn't need quite so much now?

Also, what is the "rule of thumb" for how much cash is equivalent to how much pension? The mediator said an 85k pension is roughly equivalent to 55k cash, but I'm struggling to find anything on this on the internet. 

Or of course the pot value could drop, assuming you are talking about a DC pension.

There are no universally helpful rules of thumb, not least because the type of pension (DB or DC) has a substantial impact on how things pan out. These things are always down to negotiation and some people prefer to leave pensions 'untouched' and use 'offsetting' (using the value of other assets) to reach a settlement.

There certainly is a difference between cash and pension (eg when the funds can be accessed, tax implications and so forth). Ask the mediator to explain how they get from £85K pension to £55K cash. If they are going to come up with such a statement, especially if they are 'pushing' (or you feel they are) for a particular outcome, then they can and should be able to do so. 

I've asked for this to be merged with your other pension/divorce thread. You're likely to get more helpful answers if people have all relevant information in one place, rather than dotted around on different threads. 

Hoenir

Eth4in said:

 The mediator is pushing for a 50/50 split. 

Across all your assets?  Age is not normally a factor. 

Cobbler_tone

In relative terms it sounds like a small amount. Without knowing the full picture I would absolutely look to take the pension out of the question and offset it. You could flitter away a fair proportion of it in wrangling and pension/solicitor/ultimately court fees.
Mediation is the best first step to hammer it out though and ‘negotiate’.
For context, I (initially) gave up £300k of equity and £60k cash for a £670k CETV. At the actual time of divorce (some 5 years later) it was £240k equity, £60k cash and the CETV was £450k, although the pension was worth the same. It gave me a much better result, albeit it was a very stressful process. In my personal situation it wasn’t hard and fast figures and a mathematical calculation, it was what made things workable in the future for both of us…and importantly the children.

QrizB

Eth4in said:

Also, what is the "rule of thumb" for how much cash is equivalent to how much pension?

Looking at it simplistically, £100k in a DC pension is £25k tax-free plus £75k taxable. If your marginal rate of tax is 20%, you'll pay £15k in tax. So £100k of DC pension might be thought of as equivalent to £85k of cash.

The mediator said an 85k pension is roughly equivalent to 55k cash, but I'm struggling to find anything on this on the internet. 

By that same calculation, £85k of pension would be equivalent to ~£72k of cash, not £55k.

But again, this is a very simplistic model. There might be more sophisticated ways of looking at it.