Disappointed

Fccb1 wrote:

It states;- we have been asked to advise on the percentage pension share that would be required to achieve equality of pension income for Mr and Mrs ????? and that is it.

The title says:- Report for Mr and Mrs ????? in respect of pension rights and pension sharing options.

And no where does it mention about the 'real value' of the pension compared with the schemes own valuation CETV.

As per the op - equality of pension income. It would appear that they were asked to look at it as a 50/50 split by the solicitor.

Other assets would also appear to be a £350k house mortgage free amongst others so i would have thought it difficult to justify more than that split?

Whilst there are two children one is aged 18 and in employment and the other is 15 and at school. The ex would appear to be funding about £500 per month cm plus a further £250 towards bills. Plus the op has a further income of £1100 from her pt job?

T

ccb,

It is usual to wait for a court to order a joint actuarial report - this is something that happens at first appointment as part of the collection of all relevant financial information. Then it is a court document - and both parties share the costs. They also have to agree between them what the actuary will be asked about ....

The real value of the pension will depend very much on what kind of pension it is. Even if it is a company pension, it is not necessarily of the "gold-plated" index linked final salary type that local government, NHS, police etc get. If it is not one of these then the CETV could well be the "real" value. If there is to be a pension share and you an share in the existing scheme then the CETV is less relevant.... It starts to matter if you have to move cash from the scheme or it
f you want to offset pension share entitlement against other assets such as property.

As I said before, you have to look at the global picture.

We can help you better if you are able to give us more information.

Ages

Length of marriage (including any cohabitation)

Children - ages and arrangements for them - nights with each parent

Salaries/income inc any child benefits, tax credits etc

Assets in joint names - including
FMH size, value and outstanding mortgage

Any other joint assets - ie endowment policies, savings, shares

Assets in sole names - including pension CETVs, savings etc etc

Liabilities (debts) in joint or sole names.

If you can fill in the blanks, we can perhaps give you some better guidance as to what may be a fair settlement.

Hadenoughnow

Completely missed the "equalise income" spec - sorry all.More water with it.

Most people think sharing a final salary pension on the basis of equalising the income is the fairest way to share a final salary pension ccb1.So in my opinion the money you paid for this valuable information in your pension report is not wasted.

This approach isn't the only way to deal with pensions on divorce - it's worth while studying others just in case your stbx doesn't co-operate with this approach.

How does the report suggest the CETV should be shared - ie what % of the CETV would you each have to get to be in a position to get equal income from it?
Does the report tell you how the final salary scheme will deal with your share - would you keep your share in the scheme or transfer out?
At what age could you take your pension from your share?

TBH though at this stage it seems a bit of a waste of time and money to have an actuary's report. As ccb's pension pot is negligible, the pension share is going to be in the 50% ballpark.

And the information about arrangements for pension sharing within the scheme should surely have been obtained by the solicitor? You don't need an expensive actuary for this. Who recommended you do this?

I can see an actuary would be very useful in sorting out pension shares/true values where each party has a significant fund or where the pension fund types are very different - ie index linked final salary vs money purchase.

Hadenoughnow

I know no-one wants to pay out extra cash to divorce; this example Tom Tyler gives is probably fairly unusual but I'd rather have someone who's expert in the vagaries of final salary pensions advising me.

"It is vital that you find out the practical effect of sharing a pension. The internal rules of the scheme can provide for some surprising results should a pension sharing order be made. For example I was told of one case by a colleague where the unshared pension was set to provide £30,000 p/a to the scheme member upon retirement at age 60. An actuary was instructed to report on how parity of retirement income might be reached. Surprisingly, on the operation of a pension sharing order the income to both parties only amounted to £8,000 p/a each upon retirement at 60. The reason for this was because the internal rules of the scheme provided that upon a pension sharing order there would be a loss of the members advantageous guaranteed annuity. Needless to say this surprising fact would have remained undiscovered by the parties until retirement had the actuary not been instructed."

Hi,

I can understand your initial concerns with the results of the actuary's report and you are right to be cautious about this.

The CETV is not an ideal valuation method but aiming for equality of income is seen as the fairest approach and I think the advice so far has been correct.

I assume the calculation has come back in your favour. i.e. you should get a higher % of the pot to achieve the same income as your ex? Please can you confirm? (It should do because you are younger and female, which in actuary parlance means you cost more to provide a pension for because you will live longer than a man of the same age).

The valuation is only the beginning but time spent here ensuring it is fair is well spent.

The issue becomes understanding what your options are, the pros and cons of each option and how each option affects benefits you will ultimately receive.

By options I mean offsetting, earmarking and pension sharing and what is available differs from scheme to scheme.

I spend a considerable amount of time deciphering actuary's reports providing peace of mind that that clients understand what the valuation means, what their options are and in the context of their personal objectives and circumstances, what is the most appropriate way forward.

If you would like any further guidance, please feel free to post again.

Regards

Phil

Please note: Although I am a Resolution Accredited Independent Financial Adviser my comments are given here as general guidance ­base­ d 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.