How is pension value worked out on divorce?

Hi facing court soon as x and I cannot agree. I have asked for a large %age of FMH equity and nothing else but x is not going for it hence court.
Briefly he is high earner I am traditional housewife and mother but always worked p/t. I have pension CETV £80k final salary his £200k plus but he says it does not count as money purchase and some since separation?
Had hoped he would be reasonable. But now need to look at all aspects. So. If I agree he keeps pensions and pays just CM as maintenance do I have a chance of keeping house. I will pay him £30k - 20% of equity. In case anyone thinks I am greedy I am disabled he sees kids teens 18 and 14 when he wants and when his partner will let him - not very often. Has been this way for many years

Hello Bunty,

I am not sure if I can help as every case seems to be viewed differently. My experience though is that I was dragged to a Final Hearing by my ex as he wanted his half of the equity in the house plus keep his fairly substantial pension (£79k) against my 11k pension. I was the main carer for our young children right up until they both went to school.
I asked to keep the house, pay him a lump sum of 30k and he keep all his pension. This was not viewed by his barrister as right as we each had a child in our care (the children decided who they wanted to live with eventually).

I know this, the court does not view a pension on a pound for pound basis that can be offset against equity in the house which is considered as a "liquid asset".
The result was that I paid my ex his 48% share in the equity (by re-mortgaging- with difficulty!) and he had to part with 42% of his pension.

CM is not dealt with by the courts and is not as far as I am aware considered in the scheme of things with the court. It is only dealt with by the CSA.

The courts look at housing needs of both parties, where children are involved it usually means the one with the children is given preferential treatment as the courts view the children's interests and welfare as a priority, this is why many men end up feeling "the wife gets it all".

I hope this is of some assistance. Try and avoid court if you can - a good book to help you in this financial minefield is "The Which Guide to Divorce" - try and avoid consulting your solicitor too much - lots of your own research will save you thousands.

There is a common view that pensions are different from other assets. From a financial value viewpoint that is rubbish - and reducing a pension valuation or CETV on that basis is rubbish. If they argue your stbx's should be reduced then switch to asking for a pension share, at least you get the true financial value from it.

The real answer is to make sure that the quality of assets for both parties after split is fair. That is don't leave one party with just a pension and nowhere to live and no income. That's obviously a very low quality solution and would be overturned on appeal (a la Manskell vs Manskell).

On the specifics a CETV on a money purchase plan is usually an appropriate value (except ignore transfer value penalties incling MVAs on with-profit funds). A CETV on a defined benefit (final salary) scheme is usually not an appropriate value and will be low compared to an actuarial valuation for the purpose. (You won't want to raise this point).

Contributions to pensions post-separation is, like any assets bought later, subject to debate and I believe depends on degree and time of separation - a legal issue out of my field.

Hope this helps.

Hello Nigel,

I appreciate your reply was to Bunty, but just to clarify that in case you read my post that I intended for my ex not to have anywhere to live with our eldest son - he was up North where houses are much cheaper on £10k a year more than me and could have easily housed both of them, the housing figures provided to the court at FDR and his mortgage capacity supported this.

Anyway, with regard to the pension issue - his barrister vehemently argued that a pension - an illiquid assest they said, could not be offset pound for pound against a liquid asset such equity in the house which could be released by selling. Your first paragraph gives me the impression you say this is rubbish or am I mis-reading your intent?

Elizabeth

My example wasn't referring to you and sincere apologies if it reads that way.

It's meant to be an extreme example, but is in fact very close to the case of Manskell vs Manskell which is often used as precedence for multiplying CETV's by 25%. To my mind the 25% was appeal judge's way of sorting out a bad initial division of assets, rather than precedence for applying to all pensions in all circumstances.

And to clarify further I think that his barrister was talking rubbish, sort of. He was right that pension assets are different, but then as someone who's been trying to sell a house for over 2 years I can tell you that houses can be different as well. The solution is not to arbitrarily reduce the value of one asset or another. That is rubbish.

The answer is to try and aim for an equal quality of assets to both parties. So if both parties need cash you try and give both parties as much cash as possible.

If one is a high earner they can generate cash fairly easily. Therefore they'd rather have the pension so they can retire as soon as possible from their stressful job.

If neither side wants the pensions you split them 50/50 (using an actuarial report not by CETV).

The only reason to reduce asset values is if one side is so desparate for cash that they are willing to say "I will sell you £40,000 of pensions for £10,000 cash", or "I will see you £40,000 of house for £10,000 cash". However that should be their call to make the offer.