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Use of the BDM Express Pension Valuation - Scottish Law

Use of the BDM Express Pension Valuation - Scottish Law

Notes on the use of Bradshaw Dixon & Moore's Express Pension Valuation (EPV) for cases under Scottish Law

Express Pension Valuation

Advanced usage - Use in Scottish Law divorces and dissolutions

  • Set the date of entering pensionable service as the date of marriage or partnership if later
  • Set the Valuation date at the relevant date

    Under Scottish Law, only pension rights accrued during the marriage or partnership are included in the value of assets to be divided. The formula to be used in the calculation is specified in the Divorce etc. (Pension) (Scotland) Regulations 2000 [SSI 2000/112] and is:

    ( A x B ) divided by C

    where

    A is the benefit accrued up to the relevant date;

    B is the period of marriage whilst a member of the scheme which falls before the

    relevant date; and

    C is the period of membership of the scheme before the relevant date.

    The relevant date is defined in section 10(3) of the Family Law (Scotland) Act 1985 as being the earlier of:

    a) the date on which the parties finally ceased to cohabit (1), or;

    b) the date of service of the summons in the action for divorce or dissolution.

    Although seemingly well defined the terms used in the Regulations are open to subjective interpretation, though in general the common sense interpretation that the benefit accrued is proportioned by the time accruing pension whilst married to total time accruing pension is applied.

    For defined contribution pension benefits that accrue at a constant rate, which is the assumption for all the generic schemes in the Express Pension Valuation, the same effect may be achieved by setting the date of entering pensionable service at the later of the date of entering pensionable service and the date of marriage.

    The Express Pension Valuation accrues pension rights to the later of the date of leaving pensionable service and the valuation date, and therefore it is necessary to set the valuation date to the relevant date.

    (1) Section 10(7) of the Family Law (Scotland) Act 1985 states that in determining the date on which the parties to the divorce ceased to cohabit “no account shall be taken of any cessation of cohabitation where the parties thereafter resumed cohabitation, except where the parties ceased to cohabit for a continuous period of 90 days or before resuming cohabitation for a period or periods of less than 90 days in all”.

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