The Lemon Fool

I posted on the Legal board but have not had many replies.

My question concerns the valuation of my husband's final salary pension for the purpose of dividing marital assets in our divorce, in particular whether it is essential to engage the services of an actuary, or whether there are any easier/less costly methods of arriving at a 'good-enough' valuation:

viewtopic.php?f=2&t=29286&p=410156&sid=9eaed3675b3cf8043fa6e9e129744eca#p410156

Many thanks to anyone who can add to the information already posted on the above thread.

Well, no experience myself but the Money Advice Service has a page on the matter and seems to confirm the need for an actuary or a financial adviser who specialises in divorce or dissolution. Note also the Get help from The Pensions Advisory Service section, who offer a Pensions and Divorce Guidance session which may be helpful.

https://www.moneyadviceservice.org.uk/en/articles/dividing-pensions-on-divorce-or-dissolution

If it's a final salary or other DB scheme, the scheme will have an "official process" for the admin around dividing the pot on divorce which can't be bypassed on the cheap.
The member can likely get a basic CETV valuation calculated for free by the scheme's own actuary for free though to get the process started.

This is a big subject and requires careful thought.

1. is it a Government pension or is it a sponsored pension. ie What is the situation with the scheme, its funding and also the health of the sponsoring employer. You need to understand what your situation would be if the scheme ended up in the PPF. I'm assuming here you don't transfer your CETV out but keep a percentage of the benefit payable.

2. Is your husband past normal pensionable date for the scheme? Or is he still some years away from this.

3. Check what death in service benefits are included with the scheme. Are they in trust outside the scheme?

4. The scheme actuary should be able to give a CETV figure.

3. Given the sums potentially involved paying for an actuary/advice may pay you back many times over.

flyer61 wrote:This is a big subject and requires careful thought.

1. is it a Government pension or is it a sponsored pension. ie What is the situation with the scheme, its funding and also the health of the sponsoring employer. You need to understand what your situation would be if the scheme ended up in the PPF. I'm assuming here you don't transfer your CETV out but keep a percentage of the benefit payable.

2. Is your husband past normal pensionable date for the scheme? Or is he still some years away from this.

3. Check what death in service benefits are included with the scheme. Are they in trust outside the scheme?

4. The scheme actuary should be able to give a CETV figure.

3. Given the sums potentially involved paying for an actuary/advice may pay you back many times over.

Doesn't that work both ways in that the OP's pension if there is one needs to be treated in the same way. If an actuary is required isn't the cost shared between the parties?

However, I read the other thread previously (although not now) and it seemed to me at the time the OP was getting a very fair share of the deal without bothering an actuary.

Ultimately the OP will only get the pension in one of two ways. A CETV or a percentage of the pension paid to her.

If the scheme are going to make a charge then as you say you would expect it to be split between the parties.

My concern is if she takes a percentage ie stays in the scheme then she needs to understand the risks around this course of action. If it was a small pension I wouldn't be concerned but if it is large then understanding what might happen is worth considering IMHO.

flyer61 wrote:
My concern is if she takes a percentage ie stays in the scheme then she needs to understand the risks around this course of action. If it was a small pension I wouldn't be concerned but if it is large then understanding what might happen is worth considering IMHO.

If staying in the scheme is an option that's fine. But if she is required to leave she will have to engage a financial advisor for which she will have to pay hefty commission on a large sum.

Snorvey wrote:Not really. She can set up a personal plan by herself and have the cash amount transferred to that.

That's fine if she doesn't need advice. Most people do where a very large sum is concerned.

Getting a valuation of a defined benefit pension should be simple enough. When changing some of my pensions (the defined contribution ones), my financial advisor asked me to get a valuation of my DB pension, and I simply contacted the administrators of the DB pension and asked for a valuation. They returned a vauation wihin a few days. (I never intended to "cash in" the DB pension, or change it in any way. It's security is much too valuable to change it.)

Snorvey wrote:if it's a big public sector pension that might look as if its going to take one over the LTA using a traditional actuaries valuation, we use a far more pleasant 20x income. Saves bothering with all that extra tax n' stuff.

For LTA purposes 20 x annual pension + any tax free lump sum is the standard calculation for all DB pensions (public or private). However that is just used by the government as a simple methodolgy for accessing the LTA - I can't see such a methodology being acceptable to a couple who are divorcing who would want a far more precise calculation.