Claiming Pension

(iv) If you have ....completed sufficient service to qualify for an immediately payable pension if we assumed retirement on the date of the statement you cannot transfer your pension and consequently have no right to a CETV.


Why don't they assume you want to transfer out to another pension rather than retire?
In which case the CETV would be free?
Deferred AFPS pensions are transferable.

Thanks penny10p and Maggie.

On reflection there is a clear discrepancy here. They are arguing it needs a CEV when a CETV is appropriate. I am going to check with others if there are any other schemes which apply rules in this way.


Regards

Phil

The Divorce IFA

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.

To be fair to the AFPS it must cost money to put together a detailed valuation of the pension in the appropriate format for divorce proceedings, so I am not surprised they charge for it. In fact it seems more surprising to me that other schemes offer one CETV per year for nothing!

Many schemes (particularly in the public sector) have moved to providing CEVs (Cash Equivalent Values) rather than CETVs for divorce cases. These are, as has been noted, said to be specifically for use in divorce. The statements made are potentially misleading.

Reading the small print on the CEV you may find that it says the assumption is made that the member is single (which they would be when they are divorced). Consequently, valuable widows (dependants) pensions are not valued (because the member is assumed to be single). However, in reality, if the member remarries (or enters a civil partnership) at any time after the divorce, then the spouse/partner will be entitled to dependants benefits. It is therefore arguable whether these benefits should be valued or not.

We are not sure how well understood these subtleties are in the legal profession, you could be forgiven for thinking that a CEV is a wonderfully appropriate valuation for divorce purposes, some might beg to differ.

It is often not appreciated that pension credit benefits are not always exactly the same as those in the main scheme. For example, in some schemes the pension credit member has no entitlement to dependant’s benefits, irrespective of their marital status. This is why I deplore the reference to pension credits as “shadow membership”, it often is not.

These and other similar factors should be taken into account when considering the redistribution of defined benefit pensions on divorce. Professional advice is essential when dealing with defined benefit pensions; this typically means consulting a suitably qualified and experienced IFA and or an actuary.

Peter

Why are pension schemes doing this?
How do they benefit?
Is it to deliberately reduce the amount that might be transferred to an ex-spouse and out of the scheme?
They're using the CETV getout clause in the legislation to reduce the shareable value?
Is it legal?

Maggie

Although the schemes are in effect undervaluing the benefits, it is difficult even for someone as paranoid as me to see how they benefit as such. Public Sector schemes only permit internal credits (external credits are not even an option).

I believe that the pension sharing legislation defines the value to be used and that is the CETV. This is defined in legislation that enables deferred members to transfer out deferred benefits.

The effect on the shareable value is only an issue if the split is determined in a relatively crude way (e.g. 50% of the CEV, rather than equalisation of income or capital values). As always, a 50:50 split of a defined benefit pension is most unlikely to produce equality of incomes.

Motives? Possibly best intentions but unintended consequences.

Peter

Just because you're paranoid - doesn't mean they're not out to get you....
so if you get a CEV it will be lower than a CETV - say you get a 50% share ....on who knows what basis... when the order to share goes to the scheme they will transfer 50% of the higher CETV - or the CEV ?

Sorry to labour this - but when the new CETV arrangements were introduced the consensus was that a CETV was a CETV - no different/second class CETVs for divorce purposes called CEVs and charged for?