A digest of posts in Pension: Solicitors and CETV Values covering: CETV CORRECTION FOR OFFSETTING - APPARENT COURT PRACTICE - THE 25% ‘RULE’; PENSION APPORTIONMENT IN/OUT MARRIAGE; AN ACTUARY’S VIEW ON THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS; A BARRISTER’S VIEW ON CETVs, THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS; SCOTTISH LAW; SOLICITORS, FSA ACCREDITATION + COMPLAINTS; TAXATION + CETV ADJUSTMENT
PLEASE RATE THIS ARTICLE - IF THESE DIGESTS ARE OF ANY USE IT MAY ENCOURAGE ME TO DO MORE http://www.wikivorce.com/divorce/Divorce-Forum/Pensions/20490-Solicitors-and-CETV-values.html MAIN POINTS DISCUSSED AS AT 22ND OCTOBER 2008: ========================================================================= CETV CORRECTION FOR OFFSETTING - APPARENT COURT PRACTICE - THE 25% ‘RULE’ PENSION APPORTIONMENT IN/OUT MARRIAGE AN ACTUARY’S VIEW ON THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS A BARRISTER’S VIEW ON CETVs, THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS SCOTTISH LAW SOLICITORS, FSA ACCREDITATION & COMPLAINTS TAXATION & CETV ADJUSTMENT ========================================================================= CETV CORRECTION FOR OFFSETTING - APPARENT COURT PRACTICE - THE 25% ‘RULE’ Posted by maggie - 2008/04/24 11:18 This is on Bastow's solicitors' website "A practice has grown in some courts to attribute a certain value to the CETV. It is divided by either a third or a quarter and the total assets available for distribution are calculated accordingly." I wondered if the firm would be willing to say how they view this practice ? Do they accept such reduction of CETV value and if so on what grounds? ============================================================================ Posted by IKNOWNOW - 2008/04/24 12:34 The practice of looking at the CETV and attributing a value of either a third or a quarter is if you are looking to offset your share of his pension against other capital assets eg equity in the FMH. If you are instead looking at a pension sharing order then the starting point would remain at 50%. Not sure whether this is the clarification you were looking for. Another note : depending on the value of the CETV and the type of pension some would question whether it is worth getting an Actuarial Report done on the pension because in certain circumstances the CETV greatly undervalues the pension. ============================================================================ Posted by hadenoughnow - 2008/04/24 18:59 Have paid for an actuary's report…. The actuary has come up with a table of values for STBX's pension (index linked occupationa can be taken this year) including CETV, actuarial vaue, net replacement value and gross replacement value. Whilst my pension pot (small private one) varies little in "value" according to these calulations. The actuarial value is more than £60k above the CETV; the net replacement value is 120 more - and the gross replacement value is more than twice the CETV!! The gross replacement value of my pension is the same as my CETV. With FH coming up - and a need to offet again the value of the FMH so me n kids can stay there, would like to know if anyone out there has come across a judge using anything other than the CETV to sort out an assets division? Or did I just waste nearly £400 paying my share of the report? NB he does not need cash - apart from to pay legal bills - is housed and has benefits income which would be lost of cash was handed over. Benefits will be lost when pension is taken - any time in next 5 years but pension income will be greater. ============================================================================ Posted by maggie - 2008/04/25 08:24 I hope this "you have to accept only 25% of CETV" is one of those pseudo legalities that will disintegrate when examined - like the one third of salary spousal maintenance stuff. That range of pension valuations is amazing - I wonder how the court will choose? You can see why the politicians opted for the easy option of transfer CETV - but it's unfair in divorce.There's provision in the legislation for submitting expert CETV evidence - but should accepting it depend on how well your judge understands it? - does the valuer/report writer make any suggestion or recommendation as to which valuation should be used for offsetting? Something to educate thejudge? I suppose the deal is how much the other side would have to pay to replace what you are entitled to share but generously give up - sounds like gross replacement value to me. In my view £400 is nothing compared to the peace of mind - not fretting as I do over whether you can live on £10k a year soon - whether you would have got twice as much pension if you'd tested the CETV; in your case securing your home. ============================================================================ Posted by Fiona - 2008/04/25 11:01 "The practice of looking at the CETV and attributing a value of either a third or a quarter is if you are looking to offset your share of his pension against other capital assets eg equity in the FMH." It's a moot point. Hence "A practice has grown in *some* courts to attribute a certain value to the CETV" at the beginning of the thread. The practice is based on Maskell v Maskell when the judge said only the potential lump sum of 25% which could be claimed is seen in capital terms but the couple concerned went away to negotiate and nothing was said about how the remaining 75% was to be treated. Each case is seen according to the individual circumstances and there is room for interpretation. For example, in Norris v Norris the wife sought a lump sum and the judge ruled "it would not be unfair to the husband to include the full value of the pension fund in his assets." ============================================================================ Posted by maggie - 2008/04/25 13:04 I wonder if a jointly appointed actuary would say that the highest amount should be used for offsetting - in the absence of such a recommendation how else would a district judge reach a decision ? - do they have their own actuaries? ============================================================================ Posted by IKNOWNOW - 2008/04/25 19:38 I would suggest that the onus is on the parties to decide whether an actuarial report is required on a pension in the pot. I paid for the initial report to be done which was agreed at the first appointment and giving my now ex-husband the same opportunity to seek an independent valuation if he was not happy with the CETV or in the light of us seeking a report. It is accepted practice that a figure of 25% is used for the purpose of offsetting in our local court. Whilst most things are open to interpretation, I would suggest that you accept that this is likely to be the norm. You obviously need the permission of the pension holder or an order from the court to request these reports. You have to make the decision as to whether the outlay justifies the end result. You need to also realise that you are likely to have to agree to make no further claim on your x2b's pension once a consent order is agreed by the judge, although this may not be true of all cases. ============================================================================ Posted by maggie - 2008/04/25 21:27 "It is accepted practice that a figure of 25% is used for the purpose of offsetting in our local court." Could I ask how you know this and how it was decided? ============================================================================ Posted by IKNOWNOW - 2008/04/26 13:25 REPLY: I am just another person that has gone through the divorce process and offering my personal experience to others on the forum. Both my solicitor and barrister used the 25% formula for pension offsetting. There is another thread on here re: 25% pension when offsetting. I can see the reasoning behind the 25% as it is capital value not projected value as in a pension share. My ex-husband is not set to retire for another 19 years in which time a lot could happen. He could leave the NHS and not get a job with a final salary pension, he could be on long term sick etc etc etc, therefore having a great effect on his projected pension amount. Although offsetting against equity is not exactly a guaranteed capital amount, at the time of agreement you could sell the house and give or take, the amount you receive in offsetting is likely to be of similar value. You need to decide what is more important to you at the time of seperation. I am 34 years old and have a need to house our children (agreed he should go some way to helping me do that, but that is partly another story). Taking 25% in offsetting is more useful to me than 50% pension share that I cannot get for more than 20 years. Ancillary Relief is not an exact science and is open to interpretation by a number of key players but there needs to be some sort of baseline………………….. ============================================================================ Posted by Fiona - 2008/05/14 20:29 It's important to remember that each case is treated on an individual basis and although pooling experiences is extremely useful our own experiences don't necessarily apply to someone else. The philosophy behind wikis is for people to pool knowledge and to do that it is essential to have feedback and contradictions. That's why as a general rule of thumb I think it's best to keep matters on the public forum, although I do have some reservations about asking people to reveal information about themselves. On more than one occasion I've been aware that both parties to divorce have posted on the same forum or and I know of cases when one side has read the other's post giving them a tactical advantage and in one or two cases the posts have been raised in court. My suggestion is not to probe for detailed information and give general answers unless someone volunteers specifics…… ============================================================================ Posted by hadenoughnow - 2008/04/26 12:51 Is it different if the pension is about to be in payment? What is exercising me is that the index linked occupational pension my stbx has could be in payment this year (when he is 60) or he could wait until 65 to take it. He could take a lump sum this year that is £35k MORE than the value of 25% of the CETV. If you assumed that the lump sum (I think they are allowed to take 25% of the fund) is a quarter of the total fund value, that would make his pension worth 66% MORE than the CETV. (And this would add up to the same value as the net replacement value calculated by the actuary). Even if you then took a quarter of that remaining sum to offset and added it to the cash sum he can take, you would be looking at an offset of more than £86,000 above the level that would be allowed if the offset was 25% of the original CETV. If the lump sum was placed into the cash assets pot - so counted on a pound for pound basis against the house equity - would the assets pot be House equity (inc endowment value) + lump sum + 25% of his pension replacement value + 25% of my pension replacement value? For me to keep the house, the endowment and my pension would then mean a 68:32 split. The offer I have made - using these sums (gives him some cash) - represents a 63:37 split. On a pound for pound basis - using the pension replacement values - the offer I have made represents a 50:50 split. ============================================================================ Posted by IKNOWNOW - 2008/04/26 13:25 [Contd] …..REPLY: Yours is a complicated one and I would suggest it may be prudent to seek independent advice re: your entitlement as he may or may not take pension in payment before AR or wait until after. I do not advocate simply using the CETV to calculate your 25% either, as you will see my first post on this subject. You need to decide whether asking for an actuarial report on a pension is money well spent. I got a report done by BDM to advise whether and Actuarial Report was necessary, in my case there was only a £3k difference in the CETV to the report. Another thing I would also mention is that to take a pension share in settlement actually costs to set up, so depending on the amount you are looking at you may be worth looking at other options. Obviously people from long marriages where their partner has been paying into a good pension for many years need a different approach than someone who is only entitled to say 11 years of pension and that pension has only been active for 15 years. Maybe you should have a read of these 2 threads with advice from BDM. http://www.wikivorce.com/divorce/Divorce-Forum/Pensions/16052-Pension-offsetting.html http://www.wikivorce.com/divorce/Divorce-Forum/Pensions/19993-Pensions-and-getting-proper-valuations.html ============================================================================ Posted by hadenoughnow - 2008/04/26 17:27 I have an actuary's report. It gives a range of valuations and he says an argument could be made for any of them to be used- but he does not say which he thinks is most appropriate! There is a big difference between the respective pension values depending on which type of valuation you look at. They are: Replacement value: £290k difference Net replacement value: £232k difference Actuarial value: £169k Net actuarial valuation £147k CETV: 99k "Duxbury" calulation (?) £139k. Ummm. The CETV is the least favourable of all. We have FH coming up in a couple of months. Pension cd be payable later in the year - or he cd wait another 5 yrs to take it. I want to offset so I can keep the house for me and the children. I would like to be able to settle before FH as it is costing a fortune. But they are using an old CETV in their offers (not even the one in the actuary's report) - even though they say they will do it on a pound for pound basis. I can quite understand why the 25% may be applied in a pension that won't be payable for another 20 years or so. But surely a pension that is about to be paid - especially and index linked occupational one has to be valued at more than that? At this rate he could end up with an income and a large cash sum while I have a very small pension and have to sell the FMH to pay him off :( . ============================================================================ Posted by evanslm - 2008/05/11 23:41 I am now going to sound extremely thick so please forgive in advance. When working out the total asset pot do the pensions not go into the pot at the cetv value if they do not have to be split,in other words,can i offer my ex a 40% split made up of cash plus his pensions at cetv value and i get to keep house equity plus pension at cetv value equating to 60%. Sorry to sound so confused and a bit thick but this the first time heard of a percentage of the cetv being applied. Please can someone explain? ============================================================================ Posted by IKNOWNOW - 2008/05/12 10:27 REPLY: Is it just your x2b's pension we are talking about, or do you both have one? If you are not looking at acquiring a pension share, ie receiving a share of pension on retirement then you are looking at offsetting, in which case it is likely the 25% rule will be applicable. Maybe worth confirming whether the CETV is an accurate figure as to the real value of the pension, but once this is done then you would need to work out 25% of the share of pension accrued during the marriage. If the pension was started pre-marriage, you will only be working out your 25% on the proportion built up during the marriage. ============================================================================ Posted by maggie - 2008/05/12 10:37 Just to play devil's advocate - using 25% of the CETV for offsetting is not a rule - it seems to have become a locally adopted and applied easy way out in the absence of a rule - in my opinion if you are confronted with being told to accept 25% of the pension asset you should opt for sharing if at all possible. Depends on circumstances natch but if you can - why not share a bigger % of the CETV , move your share to a personal pension and take a 25% tax free lump sum at age 50 and still have the rest to take as income? ============================================================================ Posted by loobyloo - 2008/04/26 18:57 Well on pensions at my fh judge ordered actuary report before the sharing order processed ... think because large pension on cetv, so obviously needed to be sure of fair distribution( nhs pension) I did get a good share and left a biit unsure myself but as earlier mentioned peter@bdm v v helpful on these matters ============================================================================ Posted by jelly4toes - 2008/05/12 10:36 If the pension was startd pre marriage but during pre marriage co habitation.ex2b is trying to get the house repossessed overmy head as its in neg eq no assets othr than his nhs pension that he overpaid into i have a small measly pension.can anyone tell me d i need a acturial report is it wise. ============================================================================ PENSION APPORTIONMENT IN/OUT MARRIAGE Posted by IKNOWNOW - 2008/05/14 10:17 I am rapidly coming to the conclusion that my whole financial settlement has been dealt with badly. I am in England. I was told only pension accrued during marriage was applicable and that for offsetting purposes the figure of 25% was standard practice. My solicitor […..obtained] an initial report to see whether an actuarial report would be of benefit, and came back as the CETV being only approx. £3k less. My now ex-husband had paid into an NHS pension for 15 years, which I believed had quite a lot of added benefits, which I believe were not investigated. I am happy that you have set me straight and that at least people on here may actually question their solicitors re: 25% rule and pre-marriage accrued pension. Just wish I had been party to those facts before going to FDR and having to accept an unworkable financial settlement for myself and my 5 small children. Needless to say my ex-husband walked away with a nice intact NHS pension. …. reading many posts it is clear that it seems quite a lottery as to whether your financial settlement is dealt with professionally or not. ============================================================================ Posted by Fiona - 2008/05/14 20:29 REPLY:….If I remember correctly yours was neither a long marriage, nor a short one and that was probably why only the pension accrued during the marriage was considered. Where assets originated from becomes less important over time. Also if the pension isn't huge and your need for a pension isn't pressing because there are a good number of years left before retirement it often doesn't make sense spending good money pursing the issue through the courts. For what it's worth I think your sols advice was sound in relation to your circumstances regarding pensions. However, that advice would be duff for someone in a different situation. Posted by Fiona - 2008/05/14 20:31 ….I think in England&Wales it isn't as much as a lottery as people suppose at first. Fair enough there is a great deal of discretion, Court rules force parties to do a lot of paperwork to ensure fair play, rules don't appear to be well enforced and just reading the law and protocols doesn't in itself explain how to use them but in some respects the MCA 1973 is quite clever in what it tries to address. Although there is room for interpretation and the relevance of evidence FH outcomes often do make sense. It's worth remembering the aim of the FDR is to try and reach agreement and the DJ will give an informal view. At the FH the judge will be far more thorough. As for case law I can't remember your exact circumstances and things like your age and the number of years before retirement and the size of the pension are important. As I said above in Norris v Norris the wife sought a lump sum in lieu of pension already in payment. There was a case, S v S, where the pension was the largest asset when the judge didn't differentiate between the value of different assets. Attilla posted about pensions citing case law and you might find references there. ============================================================================ Posted by hadenoughnow - 2008/05/14 10:44 My stbx's solicitors have raised the question of pension accrued pre marriage - which most of his was as he is a: older than me and b: only worked for 7 of the 16 years were married. ……..I know that this is not appropriate in English Law. I gather that if Scottish Law applied, the assets values would be those at time of separation - which, in fact would probably benefit me even if part of the pension was discounted. …….. I think the more I hear about the whole ancillary relief process, the more I think, like you, it is a lottery. You are dependent on so many variables - the knowledge and skill of your legal team, the knowledge and skill of the judge - and pensions is a very sticky area as the posts to this site show - plus of course your own ability to stay the course in the face of sky high bills, fears about the future and the emotional strain of keeping things together for the children. That is why so many of us are ground down so much by FDR that we just want it over. I know that is how I felt - and I also know that the offer I was bullied into making (by my own barrister) was too high and would have left me feeling exactly as you do now. I even found myself at FDR saying to my solictor - Oh hang it - let's just give them what they want (more than I offered) and then I can walk away and get on with my life - that would have been financial suicide - and I have the kids to think of but it made me realise how you can end up feeling. I do not feel the judge at FDR had a proper handle on the situation at all. My offer was not accepted - thank goodness - and I am now heading for a final …… I only hope now that the barrister I get will be good enough to make sure I really do get a settlement that is fair and appropriate. ============================================================================ AN ACTUARY’S VIEW ON THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS Posted by Peter@BDM - 2008/05/12 15:48 It is only in Scottish Law that the pension accrued outside the relationship is ignored. Some seek to follow the same logic in other UK courts but as far as I know, there are no hard and fast rules on the subject. On the vexed subject of the 25% figure, there is as much logic in this approach as there would be in taking 25% of the value of a car because it has four wheels. I do accept that some local courts have some rather entrenched views on the subject, which in itself creates many of the difficulties, but that does not make it right. Part of the problem is that this is an issue for the local lawyers to take up with the courts on specific cases and thereby adjust the thinking. I can understand why you suggest that the permission of the pension holder or court order is required to request an actuarial report, but that is not necessarily the case. Depending upon the amount and quality of the information already available it may not be necessary to have the permission of the pension holder to do a report. The CETV provided by the scheme often has adequate levels of information that an actuary can use in arriving at an independent valuation, this may be supplemented by scheme benefit statements and information such as salary from normal (Form E) disclosure. Information about particular pension schemes is generic and these days frequently available on the internet. Even if it is not on the web, the scheme will provide non-personal information without authorisation from any particular pension holder. We routinely ask for a signed authority from the pension holder, in case it is necessary to request member4 specific information from the scheme, but we are often asked to report using the available data where the pension holder is uncooperative. As to requiring a court order to obtain an actuarial report, this can be very desirable but again not essential. Unless the lawyer dealing with the case and instructing the actuary is very confident about whether the court will take the report into account, there is a risk that an expensive report is commissioned, which the court then refuses to admit. On the other hand, many cases are settled before a judge is required to make such decisions. A court order will usually require a jointly appointed expert, rather than the possibility of two experts engaging in costly technical arguments. This should ensure that the joint report is unbiased. However, a lawyer who is pension savvy can still tip the balance by insisting that specific issues, which support their client’s argument, are covered by the report. For the two parties concerned, a joint report has the advantage that the cost will usually be shared rather than met entirely by one person. ============================================================================ A BARRISTER’S VIEW ON CETVs, THE 25% RULE, PENSION APPORTIONMENT IN/OUT MARRIAGE AND OBTAINING ACTUARIAL REPORTS Posted by divorcelawyer - 2008/05/14 20:24 Ah pensions - every family lawyers favorite topic! I was trying to stay out of this one....but sometimes I just cant help sticking my oar in! Firstly CETVs....CETVs are not something designed by courts or lawyers. They were a mechanism already in existence in the pension world that the justice system looked at and decided was as good an indication of "value" as any to be used in providing a figure to be used in matrimonial proceedings. Because a CETV was not a mechanism designed to be used by us lot at the coal face, there are several flaws to it, and in particular we know that for the Armed Forces, uniformed services and the NHS we have to get an actuarial report because a CETV is quite often significantly less for those pensions due to how those providers calculate the figure. In short, a CETV is a blunt tool, but the only tool we have readily available as a starting point. As Peter has told us all on many occasions, it can actually be worthwhile getting an actuarial valuation in all cases when a pension is relevant because it can prove to be beneficial ...however, when at the coal face we have to undertake a costs benefit analysis of every step we take, so in many cases will just accept the CETV (save for those pensions above) just as we will try and agree a valuation of the FMH rather than spend funds on a proper valuation report. That said, if you want an actuarial report of yor own pension there is nothing stopping you instructing your lawyer to get you one. However, if you want an actuarial report in respect of your STBX pension and it is outside of the schemes above, you have to convince a judge to order it, and are likely to have to pay at least half the cost of it. And of course, it is not just the cost of the report - if either party disagrees with the report, the actuary has to be called...as the divorce lawyers bible (Duckworth) says... " ...it ramps up the cost of litigation to call an actuary, even as a single joint expert. The solution should therefore be reserved for those one off cases where precision really matters..." In short the issue of an actuarial report has to be looked at on a case by case basis to ensure the benefit outweighs the costs. The question of how much of a CETV or actuarial valuation of a pension should be taken into account for offsetting is a vexed one. A pension is not a capital asset so cannot be compared to one. There are several vaiables that need to be taken into consideration, such as whether the pension is in payment and if not how far off the pension is. The second variable is the impact of the age of the parties on this question. A party under 30 is not likely to succeed at all in having their STBX's pension brought into consideration. A party under 35 is unlikely to have a pension brought into consideration. At the other end of the scale, a party of 50 or above would certainly succeed in having the pension brought into consideration unless another section 25 criteria excluded it. This leaves us with the grey area of a party aged between 35 and 50 and how much consideration should be given to the pension. We also then have to throw into the mix the age of the STBX and consider how that effects the pension. The next variable is the duration of the marriage and how that impacts on the pension. If the marriage was long (over 20 years), this is likely to be an irrelevancy. In short marriages (up to 5 years) the pension is unlikely to be considered, unless one of the other section 25 criteria demand it. For marriages in between there will undoubtedly be an argument about the years of the marraige compared to the years of the pension, which may well reduce the amount of the pension which is taken into consideration. In short, what I am saying is that there are many variables which are taken into consideration when offsetting. There is a practice in some courts to look at a 25% as a figure that is fair in all the circumstances to cut through the arguments. In some cases this is fair, in others it is less so and therefore relevant arguments can and should be raised. When looking at ancillary relief it is hard to give general advice, as every case is decided on its own facts, and that is something that should always be remembered. ============================================================================ SCOTTISH LAW Posted by Fiona - 2008/05/14 20:31 Believe you me you do not want to have a court hearing in Scotland. Scots law is quite specific and designed to encourage pre-court settlements and financial independence post divorce but like England& Wales it doesn't always produce results people would consider fair. Matrimonial property, including pensions, are the assets acquired between the dates of marriage and separation, excluding gifts and inheritances. Most people settle before going to Court, which is usually expensive, but it often takes years (almost 5 years in our case). Court rules and forms are complex – just reading them does not in itself explain how to use them and there are concerns about accountability and lack of openness within the legal system. The judiciary and lawyers do not engage in public debate and the Scottish media rarely reports specifically on divorce in Scotland. Our independent complaints system won't be active until October 2008 and there are worries about how independent it actually is….. ============================================================================ SOLICITORS, FSA ACCREDITATION & COMPLAINTS Posted by maggie - 2008/05/14 11:25 We tend to assume our solicitor and barrister know what they're talking about if they're conducting your pension share negotiations - in my case I suspended my disbelief - something I rarely do without a general anaesthetic. I assumed what happened in my case is what happens in all cases - I had no idea my solicitor was a pensions numpty. I have no idea what happened with my barrister - maybe anaesthesia? Ditto District Judge.Ditto the solicitor investigating my complaint and the pensions expert he's consulting about my complaint. ============================================================================ Posted by maggie - 2008/05/14 11:41 ……Time for change - solicitors have to be accredited or at least have read the pension sharing regs, engage their critical faculties and protect their clients' interests or pay the price - Complain - and get your pension back! ============================================================================ Posted by hadenoughnow - 2008/05/14 13:34 Maggie, Agree with you - but they are not going to be the ones in court :( . It would be really helpful to have some cases to give to my legal team to demonstrate that there are different ways of looking at the pension. Do you - or anyone else - have any I could get together? Also how would an independent actuary go down i court as a witness I wonder? ============================================================================ Posted by maggie - 2008/05/14 14:56 http://www.addleshawgoddard.com/view.asp?content_id=1136&parent_id=1257 c£400 an hour? His book's good but I can't remember many real life cases - passed my copy on. ============================================================================ Posted by maggie - 2008/05/26 10:49 Can we "sue" our solicitors for the loss of our share of the difference between the final salary pension scheme's own CETV and the actuarial valuation they failed to get? ============================================================================ Posted by Peter@BDM - 2008/05/26 11:14 Yes, if you have the money and the energy. ============================================================================ Posted by maggie - 2008/05/26 11:56 Peter - can you confirm the legal complaints service free route caps compensation at £15,000? Anything over that you're into £lots an hour for anyone likely to help you pursue a claim? Does the FSA take any interest in solicitors advising on pensions in divorce - seem to remember they were expected to regulate pension sharing when the legislation first came in? I've read somewhere that the information gathering stage of pensions in divorce is unregulated but advice on whether to offset/attach/share is regulated - how can solicitors achieve any of those solutions without giving advice/carrying on a regulated activity/coming under the FSA remit? Some solicitors advertise they're FSA approved - should we look for that when sharing / offsetting / attaching pensions is likely - to get some accountability/redress? Will there be a mis-selling scandal? ============================================================================ Posted by maggie - 2008/05/26 12:34 Can anyone tell me what manual or handbook solicitors follow for dealing with pensions on divorce? ============================================================================ Posted by Peter@BDM - 2008/05/26 14:01 Maggie I will leave this for one of the many excellent lawyers on the forum to answer. Apart from the FSA issues, this is rather outside my own area. I will say that there is a difference between providing information and giving financial advice. To advise on specific courses of action requires FSA authorisation unless other dispensations apply. Professionals such as lawyers and accountants have such dispensations; again, I’ll leave it to one of them to set it out. Authorisation is no panacea, if it were there would be no issues with any IFAs advising on pensions in divorce. Whereas we know that some are more able than others are. I shall be interested to read what the lawyers post on this subject. ============================================================================ Posted by divorcelawyer - 2008/05/27 09:13 Firstly, you can take an action in professional negligence if a solicitor has fallen below the standard expected of him - however, it is a high bar to proving negligence and you have to be aware that costs follow the event in such actions, which mean that should you lose you are looking at paying the costs of the other party as well as those of your own. As professional negligence is a civil action, it is not unusual for the costs to run into several tens of thousands - the civil guys make divorce look cheap! You can insure these claims (by which I mean you can take out an insurance policy to cover the costs if you lose), the cost of which varies with the merits of the case. You may also find this is something that your house insurance covers you for - you simply need to call them, ask if you have legal cover, and ask if solicitors negligence is covered. The legal test (i.e. what you have to prove) for negligence is: 1. Does the conduct of the solicitor fall below the standard of a competent professional? 2. Is there a substantial body of opinion within the profession that would support the course of action taken by the solicitor? In terms of the Legal Complaints Service, they do limit claims to £15,000. Moving onto the FSA, solicitors are not providing financial advice when undertaking AR, they are providing legal adivce, so solicitors are not regulated by the FSA for this work. Some solicitors are regulated by the FSA, but these are solicitors that do offer financial advice/planning therefore need to be regulated. If your solicitor is regulated by the FSA, that regulation will not extend to AR, and therefore is not something that the FSA will get involved in. In terms of advice as to whether sharing/off-setting/attaching is the best course of action, again this is not financial advice, but legal advice as to how to achieve the best outcome in a particular set of cirucmstances. Moving onto the question regarding mis-selling, a solicitor is not selling pension advice, therefore this is not applicable. And finally, as to what books we use, each practitioner will have his/her own favorite. The two leading texts are Rayden and Jackson and Duckworth. Most practitioners then back these comprehensive texts up with shorter, specific texts that deal with one subject rather than AR as a whole. ============================================================================ Posted by maggie - 2008/05/27 10:25 Thanks for a very clear answer - I'm trying to understand why my solicitor took endless trouble over the house price and adjournments and bills - but scarcely glanced at the pension CETV. I'm amazed that Resolution hasn't set out some sort of client protection protocol for pensions on divorce - especially after what they said about selecting and training divorce IFAs : "Although we realise that IFAs cannot be a ‘jack of all trades’ our aim was to collate a register of IFAs working in the divorce arena and able to provide as rounded advice as possible, as divorce specialists. It would be unthinkable to have a divorce specialist who could not advise on pensions." "The entry criteria were agreed by Resolutions National Committee on the basis that many (although we agree not all) divorces do require some discussion of pensions and the options surrounding them. The G60 pensions specialist paper (replaced by AF3) is by no means the perfect qualification for this work but is a mandatory requirement for regulatory reasons when discussing pension transfers and the issue here is that non-G60 qualified IFAs may not know or may avoid bringing in another appropriately qualified IFA should the discussions lead into areas they are not qualified to discuss. The over-riding factor here is that of client protection. The G60 qualification actually only covers divorce in a very basic fashion (for example in the text book there is only three quarters of a page on divorce) so it is essential that a G60 qualified IFA applying for the technical course and accreditation are also required to have a good knowledge of the family proceedings rules, statutory instruments etc relating to divorce – the variety of orders that can apply and of course pensions and divorce … and so on. The issue of client protection has already reared its head as Resolution lawyers have encountered IFAs who have told clients they can arrange the clients collaborative divorce settlements themselves without the involvement of lawyers! And other instances where IFAs have steered clients towards certain pension options that have either proved to be incorrect and costly to reverse or to options that are better for the adviser in terms of what they can advise upon but not necessarily for the clients. We need to prevent this to make the role of the financial neutral appealing to both clients and their lawyers." I can't understand why Resolution seem to be doing nothing to protect clients from their own solicitors doing pensionsharing. ============================================================================ Posted by Kalamari - 2008/05/28 13:19 My imminent divorce will involve the splitting of my substantial, final salary pension plan. My stbx & I are proceeding with an excellent mediator, but I am aware that the pension needs to be approached professionally to make sure that the best possible solution is chosen. From Divorcelawyer & Maggie's excellent posts I understand the minimum appropriate professional is a G-60 qualified IFA for financial advice, together with Mediator/solicitor for legal advice? Is there a recommended resource (Resolution website?) for finding a G-60 IFA. ============================================================================ Posted by Peter@BDM - 2008/05/28 14:37 REPLY: Resolution does not publish details of their accredited IFAs on the public area of their site although the information is available to members and affiliates. We are not a firm of IFAs but I am personally a Resolution affiliate member and can access the list of 100 IFAs of which about 80% are recorded as accredited. If you send me a Wikivorce Private Message with details of your nearest main town or city I would be happy to respond with details of Resolution accredited IFAs in the area. ============================================================================ TAXATION & CETV ADJUSTMENT Posted by Kalamari - 2008/05/28 13:19 (Contd)…….. A pension CETV represnts a fund accumulated from un-taxed income. Tax is liable on the future income. The equity of the FMH represnts accumulated value from taxed income. Is this one of the accepted reasons why a CETV may be downrated when offsetting against other assets? ============================================================================ Posted by Peter@BDM - 2008/05/28 14:37 (Contd)…..Your suggestion regarding the taxation of pensions and why their value is downgraded has some validity. However, I suggest that the argument is somewhat flawed. A final salary pension is an asset of different quality to a marital home. The pension will have some form of guaranteed indexation, whereas the value of the home is subject to property market fluctuations. Arguably, the home can be liquidated and it could therefore be equated with a cash asset, but in most cases, you still need to house the occupants. A final salary pension cannot be liquidated in the way a house can, but on retirement, it is possible to take up to 25% taxfree. The extent to which the pension income is then taxable depends upon the personal circumstances of the pensioner. The family home is actually a special class of asset and from a tax perspective on disposal it is treated differently to other assets and investments. I appreciate that yours is a final salary pension, but if it were a money purchase arrangement, then growth within the pension fund would not be subject to tax. It could be argued that a CETV should be upgraded compared to all other assets with the exception of the family home. ================================================================
