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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.


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Teachers Pension CETV

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10 Feb 20 #511366 by MarcusFox
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Hi. I'm a teacher and I spent countless hours trying to discover the extent to which the CETV undervalues the pension, and got nowhere. I think it depends on how long you have until retirement. In the end the only solution is to get a joint actuary report which takes into account my pensions and my stbx's pensions, and let the actuary sort it all out. We each pay half the costs which my solicitor tells me is the normal way of doing things. Only problem - it will take months! I'll post the results when I get them.

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11 Feb 20 #511377 by IvorB
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Good luck and keep us posted.

Here's some more reading
citywire.co.uk/new-model-adviser/actuari...in-a-divorce/a288471

‘In a divorce pensions are routinely valued at less than their true worth. This penalises the spouse with the larger pension pot and the numbers can be huge.

Why does this happen? Technically it is because most people rely on the CETV (Cash Equivalent Transfer Value) in the divorce settlement. And why not. You can get it for free from your pension scheme and its mentioned in court papers (form E). However it’s a valuation for a different purpose. Its there to say how much money the scheme will give you if you take your pension elsewhere, and it does a very good job of that.

However in a divorce you are not taking your money away. Using the CETV is like valuing your house as if you had to make a forced-sale immediately. How much would that reduce the value of your house?

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24 Mar 21 - 24 Mar 21 #516189 by IvorB
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Hi Marcus

Just wondering - did you get an answer?

My stbx's solicitor is asking for an actuarial report, but I just can't see how this would possibly benefit her.

She has a teachers DB scheme and I have money a DC pot - a report will only make her CETV worth more and my current valuation less, surely?

This can only be about her solicitor trying to make more fees by dragging it out

Summary, mine's a company DC scheme, worth about £300k and hers is a teachers DB scheme with a laughable £67k valuation, which is about a 20x multiple. It ought to be nearer 40!

To buy the benefits her pension provides, £3400 a year plus £10k cash, index linked from 60 until death, would cost over £160k. But it could take another six months to get that report in. Presumably an actuary would have to consider me buying an annuity, as she cannot use drawdown.

All the while running up solicitors bills
Last edit: 24 Mar 21 by IvorB.

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24 Mar 21 #516191 by MarcusFox
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Hi Ivor. The actuary (we used Mathieson) came up with a market value which was twice the CETV. This was the price it would cost to buy a pension with the same benefits on the open market (an OMV). In the end it didn't matter because my (now ex's) pensions were mostly direct benefit also, so the pensions were shared to equalise incomes rather than capital. We did a bit of offsetting (she got more equity and I got more pension), so I lost out because of that (didn't get much pension for the equity). However, because of the way the actuary valued my ex's pensions as they would be age 60 the report turned out very nicely for me. If your pensions are equalised on income you might do well because your DC pension will only provide a small income.

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24 Mar 21 #516192 by IvorB
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Thanks for the reply.

Looking at the Money Advice Service, to buy her pension would cost between £160,000-£170,000

I really cannot see how getting this done benefits her in any way, so I should demand it. How much did Mathieson cost you?

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25 Mar 21 #516205 by MarcusFox
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I had my teacher pension and also a personal pension. My ex had two small public sector DB pensions and a very small cash pension. We asked for pensions calculated on full contributions and just marital contributions. It came to £2500.

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