I have a really basic question relating to PSO''s that I can''t find the answer to on any of the MOD web sites.
If my former wife is granted a 100% PSO, can she expect to get the same pension as I currently receive each month?
My understanding of the process is that at the point of the PSO being made, a CETV is calculated and then a new pension is calculated using this figure and current annuity rates, which are likely to be considerably lower.
I''m still on good terms with my ex and would like to find an alternative to a PSO that maximises her income.
I had to do a lot of digging reference my forces pension. Was informed that if a PSO is awarded my pension in payment would immediately reduce. She would get her own pension (from her age 60) at the percentage she was awarded. I was advised to avoid a PSO as it would severely affect my finances in retirement. I would rather go without now than in retirement. I gave her a lump sum to leave my pension alone and basically if I live to age 57 I would have repaid to myself the drop in initial pension drop and CSA payments to her so basically looking forward to being 57 and having 2 pensions, my pension restored to its full rate at 55 and a nice retirement shortly after. Where as ex has big house, big mortgage and in 11 years not much money to support her current lifestyle. happy Days
As an example, I think my current £10k a year pension would have a CETV of around £130k, but if my ex was granted a 100% PSO, this £130k would only buy an annuity of around £5k a year, a 50% drop. I''m pretty sure the MOD uses commercially available annuity rates when calculating what the CETV will provide rather than simply transferring what is already in payment.
I currently pay the whole of my services pension to my ex each month as soon as I get it from the MOD, and this has worked OK since the divorce. The problem is that should I die this will stop and as we''re divorced, she won''t get anything. A PSO would get over this problem but at a huge cost. As I''m still on good terms with my ex I want to maximise her income, so it may well be that I continue to receive and pass on my pension and she buys a life policy on me to cover the death aspect.
I don''t want to pay £180 to the MOD just to get a forecast of what they would pay in these circumstances...all I need to know is what formula do they use to calculate the new payment.