Pension CETV not essential for pension sharing?

On another thread about barristers and the evidence they need at FDR divorcelawyer wrote:
"For an FDR you need all the financial docs so far submitted and anything that needs to be submitted. The instructions should tell you if anything is missing from either side, so you can determine if you need the information to settle the case. For instance, if there is a missing CETV, but you have a rough idea and know it is going to be evenly split, it does not matter if you have the CETV as a pension share order is expressed in a percentage share."
Could I ask about this :
"For instance, if there is a missing CETV, but you have a rough idea and know it is going to be evenly split, it does not matter if you have the CETV as a pension share order is expressed in a percentage share."
Is this correct?
Can pension sharing be done without a CETV or with an out of date CETV?
How is the percentage split decided if the CETV is unknown?
How do you know an even 50/50 split is fair if you have no CETV?

Hi Maggie

This has been my argument all along!!! I am glad someone has now said the same!!!

My argument (although I am told by acturies and still cant get my head round it, that my arguement is flawed!)
But say a couple have been married for 20 years, no kids and equity in a property of 100k. If it is a 50/50 split of all assets, then surely its 50k to each and 50% of the pension!
Why bother with the CETV? In an acturies report they can say its worth a million pounds, it does not matter a jot though. The courts work on percentages nothing else.

Take our case.....
The first report to be done on my husbands pension (his former wife had the report done) said in order for the pension split to be equal on retirement then his former wife needed 80% of his pension that day!

Our arguement was........in order for that to actually happen it ment that she would not be contributing in any way shape or form for the next 10 years of his pension, so why should there be an equal share on retirement??? I was in fact married to him now and it would be me who contributes the final ten years.
The acturies also valued the pension as if he had retired that day (which is ridiculous).

So another report was done on it.........this one came back that she needed 68% for equal share at retirement.

We argued again that this was in fact incorrect.
(bare in mind here, he offered her 50% of what was in the pot at the time of their divorce some 3 years earlier)or 25% of his full and final pension, when he retired.

The final report to be done on it.....the Judge said we were allowed to ask questions along with the Judges questions. The results that came back were as expected and as we had argued all along.

She ended up getting 30% of his pension as of that day. the remaining 70% is his and he can still contribute to his part, but so he should get the most, he works 12 hour shifts for it, hes the one who pays into it, not his former ex!

I have said all along that whats the point in an acturies report? If the CETV says its worth 150k, they put a value on it that far exceeds that amount. (I suppose they do it so that it can be offset against other assets.)but the problem lies in the courts only accepting percentages.

And if thats the case then surely folks should be arguing that whoever the pension belongs to then surely they put the work in to get that pension then surely they should be getting that bit more of it. But then that causes more arguements for people who stay at home to look after the children and home etc, because they cant get a pension in their own right.
This is where I believe the government is wrong we should all be allowed to pay into pension funds even if we take time out from a career, a stay at home mum is doing a valuable worthy job, why is it not recognised as such?

Sorry going off the main point here. But think I have written enough as usual dont you?

Kind ones
Louise

Oh and P.S...

How do you know an even 50/50 split is fair if you have no CETV?

Well does it matter what the pension is worth?

If the order is 50/40/30/80% then the CETV values dont matter do they? Its a percentage of whatever the pension is valued at at that day. And ask the question to anyone, pension fund manager, pension expert, an acturie anyone and no one knows the final answer till the day the pension comes into play!

They can value it all they like, you will only get a percentage, so why pay thousands for a report if the courts take no notice of it?

I find it all very strange!

My partners former wife?? It cost her all said and done 30k for 30%, when he offered her 50% some 3 years before her fees were at the 2k mark! What was the point in listening to the experts?

Shame really!

Louise

Hi Louise - it's Sunday - I'm a bit groggy and pensions are surreal at the best of times - but isn't divorcelawyer saying for pension sharing you don't even need the CETV produced by the pension scheme?
I asked her about the evidence handed over by a solicitor to a barrister for the FDR.She said:
"For an FDR you need all the financial docs so far submitted and anything that needs to be submitted. The instructions should tell you if anything is missing from either side, so you can determine if you need the information to settle the case. For instance, if there is a missing CETV, but you have a rough idea and know it is going to be evenly split, it does not matter if you have the CETV as a pension share order is expressed in a percentage share."

I always thought you had to have a CETV to do pension sharing.How can you have "a rough idea" of the value of a pension without the CETV?

In answer to the question do you need a CETV for a pension share , then in England and Wales the answer is no - as the order is expressed as a % of the CETV (which the scheme will calculate when it receieves the order). In Scotland you do as orders are expressed in £'s.

In answer to the question do you need an actuary when the share is 50/50 then the answer is no - provided you don't mind risking losing lots of money.

There are 3 basic approaches most defined-benefit (final salary) schemes take to pension sharing. 1 of these approaches leads to a reduction in the total assests for deferred members, 2 of these approaches leads to a reduction in total assets for current members, and in all 3 of the approaches a 50/50 split of CETV does not lead to a 50/50 split of the true value of the assets. In each case it is the receiving person that loses out.

The following example (I hope it displays OK), from a divorce guide we are making available to solicitors, puts some scale on the issue.

Different outcomes of a 50% of CETV share
For a couple both aged 45 sharing his current defined benefit pension

His pre-share pension is projected to pay £25,000pa from age 60, to be worth £250,000 and with a CETV of £200,000.

Scheme type 1
Internal credit to her. His debit calculated and deducted at retirement
His pension £16,500pa Her pension £7,900pa
Value £164,700 Value £ 82,300
Total value £247,000
Loss due to sharing £ 3,000 (costs)

Scheme type 2
Internal credit to her. His debit calculated at date of share
His pension £12,350pa Her pension £7,900pa
Value £123,500 Value £ 82,300
Total value £205,800
Loss due to sharing £ 44,200

Scheme type 3
External credit to a personal pension. His debit calculated at date of share
His pension £12,350pa Her pension £7,500pa
Value £123,500 Value £ 78,100
Total value £201,600
Loss due to sharing £ 48,400

Nigel - thanks - I really need to be clear on this point:
You said
"In answer to the question do you need a CETV for a pension share , then in England and Wales the answer is no - as the order is expressed as a % of the CETV (which the scheme will calculate when it receives the order). In Scotland you do as orders are expressed in £'s."

Do you mean that at the time of negotiating what percentage of the pension each spouse should have, there is no requirement for a pension CETV at all?
If there is no CETV and no actuarial valuation how are the percentage shares determined at FDR or Final Hearing?

Maggie, theoretically you don't need the CETV, as you could just say "Mr Pension Scheme please share to the other party 50% of whatever the CETV is".

If you do that you have no idea what is the value you are sharing, not that that makes any difference if you are going to blindly share 50%.

My point in my previous post was that saying "Mr Pension Scheme please share to the other party 50% of whatever the CETV is" will lead to the other party getting less than 50% of the value of pension. It all due to the mechanics of what the CETV is, and how the schemes share pensions in practice.

The previous post also shows that sharing can seriously damage your wealth.

My conclusions are

1) don't leave pensions to the end as something separate,but include them in the main solution

2) get an actuary involved, and if you don't understand them or disagree with their assumptions tell them