I know I have asked this previously but I am still confused and would appreciate someone knowledgable spelling out an answer for me. I can be very thick at times, especially at the moment.
I have an NHS pension which has a CETV value attached to it.
Is the figure quoted used as a ball park figure in my assets calculation or is there some sort of formula that gives it an actual value - given that it''s not real money.
Hope this makes sense
(Was hoping Ian might be able to advise)
The CETV is the Cash Equivalent Transfer Value but depending on the pension the true value may be more than this. There is no simple formula. Various factors and tables need to be taken into account when calculating the true value with a NHS pension and you really need an actuarial report unless perhaps the pension fund is to be shared 50:50.
Another way to look at it if your trying to compare a final salary scheme with a money purchase, is to forget the CETV value and look at the defined benefit you have already accumulated. (That is the amount you will be paid per year in pension when you retire.)
A very rough calculation is that it takes approx £25k to provide each £1k per year pension.
In terms of its value the CETV will be the figure used at the start of the negotiations and is the main figure to concern yourself with. It will go on form E etc.
At different times in the negotiation differing figures may be placed upon it depending on the solicitors knowledge levels, whether an actuary is used and what is specifically being negotiated. In fact, professional guidance might be needed to ensure fairness but the CETV is the CETV.
For example, as you rightly point out you cannot spend pension captial like real money. Therefore, if you were offsetting the value of your pension against other real money assets (like a house) then you might expect to receive some sort of a discount. Not to give up pension capital £1 for £1 for equity.
A different value might be placed on the pension if you end up doing pension sharing and your ex has a different type of pension. For fairness, an apples and apples comparison is always preferable to apples and pears. This is not always the case when looking at different types of pensions and the NHS pension is pretty unique.
For example, the CETV assumes a single life pension but this isn''t the actual true picture.
I would seek professional guidance on your situation especially once the other side starts looking at your assets.