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What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

What steps can we take to reach a fair agreement?

The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


Do you need help sorting out a fair financial settlement?

Our consultant service offers expert advice and support to help you reach agreement on a fair financial settlement quickly, and for less than a quarter of the cost of using a traditional high street solicitor.


Actuary

  • sexysadie
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04 Aug 12 #347365 by sexysadie
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I think you are missing something. In my own pension it works like this:

I have a final salary pension (these are the ones that can be undervalued by a CETV, though actually, mine wasn''t). My ex got 27% of it. This is 27% of the value now, not the value when I retire, which won''t be for another thirteen years at least.

The 27% is taken out and put into another pension for him. When he retires they will add a cost of living increase and pay him a pension based on what I am paid now plus this increase but only on the basis of the years of contributions that I have made up until now, not the number of years that I will have made by the time I retire.

When I retire, they will do something similar to my pension, but it will be a pension debit. Depending on when I do actually retire (it could be later than 13 years from now) I will lose anything up to about 25% of the pension I would get based on my salary now - but because it is a final salary scheme I can make up the difference by getting above-inflation pay rises (for example if I am promoted) and also claw back some of the loss by working more than my standard 40 years of contributions. So the loss isn''t as bad as it looks at first, particularly for younger people, who have more time to move up the salary scales and longer to carry on making contributions.

Best wishes,
Sadie

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05 Aug 12 #347374 by kdad
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Yes, and if an independent actuary had given a higher CETV, you would have lost more than 27% - this is where I struggle with an independent.

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05 Aug 12 #347379 by Ukellie
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Thanks for your responses are you saying that I might loose out if we use an independent actuary
Both our pensions are final salary and civil service my stbx is the higher earner

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05 Aug 12 #347382 by hadenoughnow
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If they are pensions in the same scheme with the same benefits then there does not seem any point in having an independent actuary''s report especially if there is to be a pension share.
I guess it may be relevant if there''s a big difference in ages.
If your stbx wants to argue to keep pension accrued pre marriage, he could just divide CETV by the number of teas paid in and suggest he puts 20 years worth in. There is no hard and fast rule about this though. Whether he keeps premarriage pension will depend in a range of other factors with needs top of the list.

Do you have up to date cetvs for both pensions?

Hadenoughnow

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05 Aug 12 #347403 by kdad
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I wouldn''t go for a pension share, as the cost of putting in place the order needs to be taken into account, and the terms of the "post divorce" pension benefits will probably be worse for both of you. As it is a civil service scheme, the only winner will be the government!
I am surprised that the solicitors have recommended appointing an independent actuary - why did they do this?

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05 Aug 12 #347408 by sexysadie
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It is not necessarily the case that the post-shared pension deal will be worse for either or both - it depends on the scheme. In my scheme we both get the same deal as I had before, and the share only cost £700 between us, which is low for pension sharing costs.

The calculation that hadenoughnow suggests is a bit rough and ready as an actuary will value contributions in the early years differently from more recent ones. However, I would have thought it would be sufficient as a starting point for negotiation. As hadenoughnow says, you don''t have to agree just to count the years accrued in the marriage; that is something that you can negotiate. In my case in effect I got to keep the years after separation but share most of the years before marriage - though we didn''t get to that result in such a rational way.

If your stbx is the higher earner then his pension will be worth more however it is calculated (because it is based on final or average salary) so you won''t lose out by having an actuary. However, if they are both in the same scheme you may as well use cetvs. Actually I think many of the public service pension schemes have changed the way they calculate cetvs so that they are now much closer to what an actuary would give you - but lawyers haven''t quite caught up with this yet, and still think that they are always vastly undervalued by the CETV. I think this is still true of the armed forces schemes and probably the police but not the others.

Best wishes,
Sadie

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05 Aug 12 #347416 by kdad
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I did say the terms will "probably" be worse. Every situation is different, dependant upon age, salary, length of service etc. The first things to do are;

(i) obtain a CETV

(ii) find out how the civil service treat a pension sharing order.

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