Need help regarding pension

Just at the start of the divorce process was asked by my sol to find out CEVT value of one of my pensions (with HSBC) They have written back and I quote "CETV as this is a stakeholder pension there is CEVT however the transfer vaule available is equal to the current fund value on the date of transfer"

Does that mean that the pension can still be be split between myself and stbx? The value is a pittance based on 5% growth, pension equals annual pension £431pa My sol has already said it aint worth diddly squat:laugh:

Hi,

Firstly, I can confirm that the value you have requested is the correct one and should be the one disclosed at this stage. You mentioned it is one of your pensions and of course, you will need to disclose details of all pensions you have.

As a Stakeholder pension plan the current value and the transfer value will always be the same as under the rules no penalties can be taken on transfer.

It is a money purchase pension plan and ultimately the pension derived from it will be a function of three things:
- contributions in.
- investment growth.
- prevailing annuity rates at retirement.

This is important when deciding how to deal with this asset as the risks all lie with you. It is possible for it to be split (or shared) or alternatively, you could look at the other options of pension attachment and pension offsetting. As always, there are pros and cons to all three options but the court is looking to see a fair settlement of all assets.

However, if this is the only pension asset of the marriage, (and given the size of the projected pension, I assume that the current value is relatively low) it may be sensible to look to offset the value of this pension against other non pension assets. This will potentially minimise costs as implementing pension share orders and/or attachment orders will increase costs. There are good actuaries who can help with these types of reports.

I hope that this helps as a starter. If you need any more help please post.

Regards

Phil

Please note: Although I am a Resolution Accredited Independent Financial Adviser my comments are given here as general guidance ­­­­­­­­base­­­­­­­­d on the (often limited) information available and does not constitute financial advice. They should not be seen as a substitute for detailed financial and legal advice.

Brillant Phil thank you for replying Mazadaman

Mazdaman - please keep posting and I'll keep learning. Expect you can guess what stage I'm at now!

Phil - just the clarification I was looking for. Had been struggling to establish why CTV (Current) and CETV (Cash Equivalent) were supposed to be different, yet pension provider advised that recent valuation on an old policy was the same thing.

Hi,

It is always worth double checking that the information being provided by the insurance company is correct.

This guidance is specific to individual arrangements such as personal pension plans, retirement annuity contracts, section 32 buyout plans and self invested personal pension plans.

As posted earlier Stakeholders cannot have transfer penalties. With all the individual money purchase plans detailed above there can often be no penalty on transfer hence the fund value and transfer value are the same.

However, this is not always the case. This is something to particularly watch for in older style contracts (but differences can occur in newer plans). The difference between TV and CV can represent a significant material penalty on transfer and is often quoted in percentages. (i.e. there is a 15% penalty on transfer.

This difference is usually due to either:

1. Contract exit penalties - i.e. the plan penalises transferring out before the selected pension age. This penalty usually reduces the closer
2. Investment exit penalties - for example, With Profits policies often have a market value adjustment to protect existing investors when someone leaves the fund.

Therefore, I would always recommend careful examination of policies to ensure that where penalties exit these are mitigated, particualarly when looking at pension sharing.

In addition, you should be mindful that the penalties can and will change over time.

Regards

Phil

Please note: Although I am a Resolution Accredited Independent Financial Adviser my comments are given here as general guidance ­­­­­­­­­base­­­­­­­­­d on the (often limited) information available and does not constitute financial advice. They should not be seen as a substitute for detailed financial and legal advice.

And in case anyone is reading here who hasn't browsed elsewhere in the pension section, it is worth making the point that pensions come in all sorts of shapes, sizes and flavours, and they have very different characteristics.

Money purchase pensions (such as discussed here) are a totally different matter to, say, an Armed Forces Pension for a serviceman: other than that they are both "pensions", there are so many other differences in how they are valued, how they work, what needs to be considered etc etc that they would hardly seem to be related...

So never assume anything about a pension unless you have checked that it is true! Don't rely on what you read (here, or anywhere else) unless you have checked that it is specifically applicable to you, the particular pension and your particular circumstancess. There are more tripwires in this area of family law than almost any other.

Even if you are self-repping, it is almost impossible to be your own pensions expert except in the simplest of cases (and you generally need the expert to tell you whether or not you have the simplest of cases, or something much more difficult!).