Blocking Pension Share

Hi Maggie

In answer to your post i agree with you all the way.
But and its a big but..........in our case it was what was fair, my husband took on all the debt from that marriage too, so in answer to you hoping i'm in agreement that a future equal share on retirement would be fine, if she had taken on half the debt too. (It was over one hundred thousand pounds, the debt) What i objected to strongly was she left him in all that debt, was ok whilst he was still in debt, i paid it off so her argument was there was no longer any debt, so therefore she should of received 80% of his pension to give an equal share when he finally retired! He retires some five years before her, so she has to wait till shes 60 and he will be 55.
Anyway In answer to your post yes its a defined pension, she cant transfer out, i think its index linked and yes she can take a tax free lump sum.
Also when the absolute is granted you can still get a pension share but you lose the right to the widows part of the pension. (thats where the headache begins) in our case they (her pension acturies report) said it was worth 10%, yet the pension fund manager said it was worth 50%? I have no idea how it came to that but they decided and the Judge (on my husbands request) decided to go half and hlaf on the 10%. The report also at the start of all this was before he did 25 years, once we got to the final hearing some 3 years later he had done his 25 years so it went from 80% she was after to 60% then ended up with 30%? This was all based on her reports that cost her 1000k, if she had taken my husbands first, 2nd third fourth fifth and sixth offer of 50% at the beginning and not been so greedy she would still have her house to this day! In fact she ended up having to sell it for her lawyers fees and her acturies fees!
Barristers, Lawyers, Solicitors ect ect have no idea about pensions and should keep out of them all together.
Who lost out here? SHE DID big time and all because she put her faith in advisers instead of listening to the advice of those closest to her.
The only way you are going to get to the bottom of your case is by employing "an expert" in pensions, but of course Maggie that comes at great cost and i dont know whether its worth it for you?

Kind Regards
Louise

I think we've both been put through the pensions wringer Louise - I'm amazed by the ignorance of the "professionals" along the way - no-one I met knew how to do pension sharing - only on this forum did I hear anything that sounded like expertise or even experience.
I was forced out of the final salary scheme I shared - I finally transferred my share to a Scottish Widows bog standard stakeholder - it's cheaper and simple enough for me to understand .I spent about a month trying to establish with them what the restrictions are on the safeguarded rights portion - [that's my share of everything paid in to the original contracted-out pension since 1997 - two thirds of my pension CETV ] - I asked them what does safeguarded mean. They wrote to say it meant I couldn't take out any tax free cash from that part of the pension fund - they've now sent me a retirement illustration showing the amount of tax free cash I can take out of the safeguarded rights pension.
It's been like that for the whole pension share - constant mistakes and contradictions.
I think most of all that solicitors without specialist training should not be allowed to do pension sharing.

Hear hear, my solicitor was great on the divorce aspect and insisted after 33 ysr of a marriage and no children that the split would be 50/50. What he failed to recognise was that my pension was in payment (i'm 63 now) and my X is 54 and still working. The moment my X started to go after my pension it was the beginning of a whole new ballpark. I had to learn a lot very quickly and my solicitor eventually admitted he did not realise the full implications of all of this. In the the end I hired financial advisors and obtained a report based on pension sharing and equalisation at the age of 63 (my X retirement age). It was very revealing.( Especially SERPS valuation). If requested I will put up the main facts of the report for anybody interested

Rig - any information you can publish on here is someone else saved.
You were lucky that your solicitor had the good grace to admit lack of expertise - it's totally understandable for such a minority activity.
May I ask whose idea the equalisation of retirement income was - is it a recognised aim/outcome for pension sharing by older divorcers?

sorry for late reply. I became very frightned when m X's sol. started to quote "Actuary now looking into this" I was not prepared for this new activity. I started looking around the internet for advice and found a local pensions/financial consultant firm. After an initial free discussion I hired them produce a report. It was they that a fair to progress the settlement was to equalise pensions at the age of 63 (my X's retirement year). When pension are in payment it opens up a whole new ball game, so I'm told. It seemed to me the fairest way for both of us without trying to score points.

Hi Rig,

I am interestd in this subject too, but know very little about it. I thought that pension sharing means 50:50 at the point of pension being applied? Is this the case or is it worked o out some otherway? Also, how does CETV valuation work, does it say the pension is worh x ££ as a lump sum or how much it is worth over, say 20 years?

Peter

Peteringout
Pension sharing does not necessarily mean 50/50 but it is often the starting point. Much depends on whether all the other assets have been dealt with. The experience and knowledge of your lawyer and that of your stbx may also come into play. There are no straightforward formulae it will (should) all depend on the circumstances of your case. A divorce under Scottish Law is different because only the value gained during the marriage is taken into account.

The CETV (Cash Equivalent Transfer Value) is a crude but the simplest way of putting a value on the pension. The legislation that enables pension sharing (and attachment) requires that the pension valuation provided by the pension scheme is a CETV unless the pension is in payment, when it is a Cash Equivalent Benefit.
It is also a legislative requirement that the court order making the sharing or attachment order is made in terms of the CETV (or CEB). In Scotland, this is in terms of the actual value; in the rest of the UK, it is in terms of a percentage of the CETV or CEB.

The CETV is the value that the scheme would give, if you decided to leave the scheme and transfer the value to another pension arrangement. Because the pension is a promise to provide an income at a later date, the transfer value is to a certain degree theoretical. What it most certainly is not is what it would cost to replace that pension in the commercial pension market. In a divorce, CETV’s often undervalue the pension, because they are really a value for a different purpose; this is particularly likely if the pension is a defined benefit (aka final salary or salary related). One particularly important point with CETV’s is that because they are the value that would be paid if you left the scheme, the assumption is that this is what has happened. Depending upon the rules of the scheme, this can have a very significant impact on the extent to which a CETV under values a pension.

CEB’s are rather different. Because it is not possible under current pensions legislation to transfer a pension once it is in payment, the CEB is a value of that pension income stream made by the scheme. For technical reasons that I will not bore you with here, CEB’s also tend to under value the pension.

Whether the CETV is a fair or appropriate valuation of a pension is only an issue in some circumstances. If a pension sharing order is made and looking at the pension in isolation, it is decided to split it 50/50, it does not matter how fair the valuation is. In principle, each party will get half of the theoretical value, so the appropriateness of the valuation is immaterial. Probably this thinking lay behind the legislation. However, the valuation may be a significant issue, at least for one party in various circumstances.

The bottom line is that in most cases, before a pension sharing order is made, there should be a technical analysis done to establish whether the intended sharing order will be to the financial detriment of one or both parties.

I hope that this helps. If it raises questions do not hesitate to post again and I will do my best to answer.