My wifes solicitor wants to have my pension calculated. I already draw the pension which is a civil service pension. I have paid nothing into it as the state paid it. I don't understand how the value can be calculated as if I live for 10 years it is worth 10 times more than if I lived for 1 year. Obviously i am seeing things too simply. HELP!!!!!!!!!!!!!!!!!
The Civil Service Pension Scheme can and will calculate the value of your pension. The result is called a Cash Equivalent Benefit or CEB. The calculation will be based on actuarial principles, that is to say that it will use mathematical probabilities, one of which is how long you will live and therefore how long the pension will be paid. There are various actuarial tables that contain mortality factors (the probability of a person of a certain age dying each year). For example, one such table (produced by the Government Actuaries Department and based on data collected between 2000 and 2002) shows that on average, a man now aged 60, has a life expectancy of 19.8 years.
I am sorry but I cannot fully answer that question. No doubt, there are those with legal expertise on the forum who will. For what it is worth, my understanding is that courts regard pensions in payment as income rather than capital assets and look to divide them on that basis. I believe that there are legal precedents that support this approach. That is to say, that if the basic principle is to split things 50/50 they may seek to achieve equalisation of income.
From my rather jaundiced perspective, that is not a particularly fair way of doing things. However, I am sure that the legal reasons are sound.
Let’s look at a rather exaggerated example to illustrate my concerns. Assume that I am receiving a pension of £20,000 and I am sixty years of age. If my soon to be ex is the same age and gender, then splitting the pension in half is ok. However, if my soon to be ex were only 40 years of age, then in my view the issues are different. At sixty, I have an average life expectancy of about twenty years. In crude terms, twenty years of a £20k pension adds up to £400,000. However, at forty years of age, my soon to be ex has an average life expectancy of forty years so a £20k pension on the same crude terms is worth £800,000. Using these very crude numbers, it costs twice as much to by a £20k pension for a forty year old as it would for a sixty year old.
If the court were to decide that the pension should be split so that it produces the same income for each of us, in my view I would get a poorer deal, because my pension is only likely to be paid half as long as my soon to be ex’s.
I have used people of the same gender in my example just to highlight the issues and because the numbers are more convenient. If the sixty year old is male and the forty year old is female, the differences are larger because on average, women live longer than men. Similar issues arise if one person is in below average health, but that is probably straying too far from the point.
It would be interesting to hear from lawyers on how they see these issues.
In my experience solicitors and barristers decide the percentage that's appropriate for the ex-spouse - how do they do it? Is this an explanation?
Family Law week on the Martin-Dye appeal:
"In this case, the district judge had the option of leaving the pensions undisturbed, compensating the wife for the disparity in income ('offsetting'), or making a pension-sharing order, adjusting the apportionment of the capital property to reflect its effect. The district judge adopted the former approach, but should have favoured the pension-sharing order. Accordingly, the court ordered the 57:43 division in favour of the wife to be applied to the pensions, with an increased balancing payment to be made by the wife to the husband.
Finally, the court observed that the difficulties encountered in this case should not recur, as the Family Proceedings (Amendment) (No 5) Rules 2005, SI 2005/2922 (in force from 5 December 2005), introduce Form P, which should be used in every case where a pension is significant and where a pension-sharing order might be made."
"or making a pension-sharing order, adjusting the apportionment of the capital property to reflect its effect."
Does anyone understand that statement - or how Form P is a fix for the "difficulties encountered" in the Martin-Dye case?