After some advice. A couple in their mid 50's are to divorce. They have been married for 30 years and their children have left home. He does a regular job and she works for the NHS but is hoping to retire next year after 37 years service. They have a house worth £350K and the mortgage is paid off. There are no outstanding loans.He has savings of £350k but no pension of any worth. She has £50K in savings but a good NHS pension pot (£250K)that is expected to pay out £12K per year when she retires next year.The question is what will the split be?. Is her £250K pension pot considered to be worth the equivalent of £250K of his savings?
Many factors to consider and each case is different but in my divorce I decided not to split my pension and my ex wife got equity worth the same as my pension pot.
Are you saying then that if it is agreed that the wife keeps all her pension pot of £250K the husband can keep £250k more of the savings?
Total assets, including pension pots, divided by two?
How those assets are split is up to them/the court.
How much would a £12k/year annuity cost?
I've no idea about how divorce settlements work - but that's what I think I'd be thinking of in terms of "fairness".
So, could it work like this She gets to keep her pension. He gets the house.She gets £250K savings . He gets £150K savings? Is it this simple?
Who is older? Makes a big f difference.
He is 55, she is 54.
Looks like close to £1M of assets. Probably worth getting some professional advice ..
So, could it work like this She gets to keep her pension. He gets the house.She gets £250K savings . He gets £150K savings? Is it this simple?
It'll depend on what each party wants and what they both can agree on but that sounds reasonabley fair and amicable.
Some legal advice is probably sensible but avoiding getting heated and actually needing lawyers and the courts would save a lot of money
Pension pot does NOT equal cash in pocket.
You'll need a cash transfer equivalent value for the pension.
Then speak to an advisor as to the worth of that pot.
The age IS significant in the decision.. but it's not as straight forward as pension=savings because I know... I've been there!
DrP
Probably worth getting some professional advice
Which will probably cost them 25% each. (Or something)
Is it an amicable separation? If so surely they could agree on something. Once you bring solicitors in each party suffers.
I was lucky.
25% ? So 250k to get professional advice? I’m in the wrong job… 🙄
The Cash equivalent value of the NHS pension will be a lot higher than £250k, probably closer to £450k. The scheme gives a lower value for the in scheme "value" of the pot
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings). Better to retain a claim in the pension and then divide all other assets in half. There is a scheme that allows just this. I have no idea whether one can swap a defined benefit NHS pension to a lump sum and IANAFA.
I was in a similar position. Wife was carried into court and claimed that she couldn't walk therefore couldn't work and wanted 100%. Judge told her to go outside and rethink her position and ended up getting 50% which I believe is normal when no kids are involved.
No idea why the judge did that, I can only assume she saw her walking across the car park.
25% ? So 250k to get professional advice? I’m in the wrong job…
I did say, ‘or something’. 😜
I had to give 50% of my (not huge) preserved pensions. The house was split 70/30 in her favour (House was worth around £270,000 at the time) and I got to keep the savings of around £20,000. Oh, and my motorbike. Her solicitor was fully expecting to get the house in full. I expected 50/50 for everything so didn't bother with a solicitor! She has refused to sell the house - it's been nearly 7 years ...
I had to give 50% of my (not huge) preserved pensions. The house was split 70/30 in her favour (House was worth around £270,000 at the time) and I got to keep the savings of around £20,000. Oh, and my motorbike. Her solicitor was fully expecting to get the house in full. I expected 50/50 for everything so didn’t bother with a solicitor! She has refused to sell the house – it’s been nearly 7 years …
I kept my (not huge either) pension and walked away with a paltry amount from the house. I also kept my motorbikes.
He will get ****ed over... its how it works.
Scotland or England? Different rules apply.
Watching with interest as I'm in a very similar position.
Very slightly younger, fully expecting to get royally f****d over but could no longer live like that
There are many different answers to this and it depends on what the couple want. Someone I knew was in a similar position. They wanted the house, their spouses wanted to keep their pension. From a purely financial position my friend was in the worse position but any other settlement would have meant selling the house and they did not want to do that.
If the couple involved here are happy to divvy up the assets on the basis of who wants what then great, they should do that.
However of one or other party wants to maximise their position then, particularly with a final salary (well average salary now) pension in the mix, they are going to have to take professional advice.
That advice, whilst not free, will not be 25% of their pot. More like 2-5% but they can get quotes up front.
I really cannot recommend enough that your friend seeks professional advice for this. A good solicitor will make the whole process a lot fairer and easier. It will not make it less stressful for them, either of them, but that is the nature of divorce.
On pensions & savings... When I went through my divorce, my ex had no savings, minimal pension and about 18% equity in the house. I had a small inheritance, a share of a house that was being rented out a pension with a relatively small CETV and some savings. When it came to the financial part of the agreement, she asked for half of everything. We'd only been married seven years. I ended up being able to settle on 225k as a lump sum, which meant I could keep the house (but re-mortgaged) but which cleared out every other bit of cash I had apart from the pension.
Watching with interest as I’m in a very similar position.
Very slightly younger, fully expecting to get royally f****d over but could no longer live like that
You are my mate and I claim my £5.
Just about to get into the details of this myself now. 10years younger and kids still at home.
When is best to buy a new bike? Have it as debt now or outright afterwards? 😀
Long marriage. No apparent reason to depart from an equal division of assets. You can enter into a pension sharing order if there's no obvious way to divide the assets in order to achieve equality.
Sorry to read this, contrarian viewpoint, I know a few divorced people living separate lives still retaining their mutual assets. Must be some sort of gentlemans agreement in place.
Strangely enough, I know a few couples who have their own individual houses.
Maybe the 2 observations are related.
No kids involved in mine but unreasonable behaviour (a Louise). I had advice and a letter from someone I really couldn't afford (I knew them to speak to) she wanted everything and got nothing, not a penny. But we were able to show that not only had she not contributed to running the house for years but also I effectively kept her afloat and I ended up £16k in debt. To be fair the bewigged chap who acted for me completely outgunned her back street solicitor and it took him less than 30minutes.
So either keep it friendly or walk gently but carry a big stick.
When is best to buy a new bike? Have it as debt now or outright afterwards?
I am not a lawyer, but surely now. Say it costs £5k cash now, the cash pot is £5k less so you're getting £2.5k less. But when the time comes to split your assets it's only worth 3k (it's used) so to keep it you only have to hand over an additional £1.5k. ergo a £1000 discount??..
Is she looking for a boyfriend?
.He has savings of £350k but no pension of any worth. She has £50K in savings but a good NHS pension pot (£250K)that is expected to pay out £12K per year when she retires next year.The question is what will the split be?. Is her £250K pension pot considered to be worth the equivalent of £250K of his savings?
THEY have savings of £300k.
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings).
Her pension is £12k pa, there is no real pot as she's got a Final Salary Pension - and work on 40x for a non-final salary pension.
When I went through my divorce, my ex had no savings, minimal pension and about 18% equity in the house.
18% - where did that number come from?
THEY have savings of £300k.
350+50 = 300 ?
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings).
Last year my final salary pension had a CETV of 38x the estimated annual pension at the same time. Having said that, index linked annuities, at age 55, male, non smoker, are about 2400 per 100k pot- or 500k to return 12k annually (level annuity will obviously payout more initially, but that's be stupid to do at your ages). Suggesting that the pension alone isn't much short of half of all your assets. You'll probably have to split the pension just to enable you both to have a home.
350+50 = 300 ?
i think he/she was saying that with his 350 and her 50, the 2 x 50's cancel each other out so 300's left as their joint savings.
thats how i understood it anyway.....
350+50 = 300 ?
Sorry, mis-typed. THEY have £400k.
Sorry, mis-typed. THEY have £400k.
thats how i understood it anyway…..
looks like i understood it wrong then 😀
Having just concluded my own divorce, I can tell you exactly what my solicitor told me and that is that in your case, with a marriage that long, everything will be considered marital and will be split equally between the two of you.
That incldes pensions. You will need to get a pensions consultancy to review your pension provisions and then give a discrete valuation of the total pot's worth. That amount will then be on your balance sheets.
You basically add it all up and simply divide in two. The only times this doesn't happen is when there are other needs for each party to be met, but since your kids have left home and are not dependent on you (and assuming your partner has no special needs to take account of), it will be 50/50.
You can split the assets any way you like, so one can keep their pension and the other the house equity if you wish, just so long as all the parts add up to half. In the case of pensions, there would need to be a an actual transfer of funds from your partner to you if you decide to do it this way.
"It’ll depend on what each party wants and what they both can agree on but that sounds reasonabley fair and amicable."
It may or may not be fair, but how the hell can we tell if it's "amicable"
It may or may not be fair, but how the hell can we tell if it’s “amicable”
A lawyer tells me it’s fair if you both feel like you got shafted at the end 🙃
It may or may not be fair, but how the hell can we tell if it’s “amicable”
If they agree on that deal between them without it being forced on them by the courts then it's amicable
Tell 'your friend' to get some proper paid for legal advice.
Given the sums involved and the age of 'your friend' it would be the height of stupidity and folly to take any notice of comments from randoms on a chat forum.
No two cases are the same - every individual going through a divorce has their own wishes and expectations - and are often influenced by voices of others who aren't directly involved.
That's one good reason to use a solicitor.
Another is that they will provide impartial advice and will work to protect the best interests of their client.
That costs money.
If 'your friend' doesn't appointment a solicitor soon that will be irresponsible, reckless and stupid but - hey, it's their money and their future.
Frankconway is correct. Believe me, it's the only way.
And then listen to your solicitor, that's really important. It's so easy to try and do the 'right' thing, which in my case meant almost giving away lots of money for zero benefit and no goodwill. The law says 50% for a reason.
A couple of 50 something friends are on this road at the moment, and one of them has hit the point where trying to do the right thing amicably has hit a brick wall as his ex has finally realised shit gets real.
This prompted an intriguing discussion with MrsMC who set out what she felt a fair split would be if we were to divorce. After initially expressing my shock and disappointment that she had even begun to think about this, I had to concede that my "ideal theoretical split" would be on the same terms.
I'm not sure if this was a good or a bad thing....
Got friend going through now. Told me everything’s gets put in a big pot. House, savings, pensions. To calculate pensions each party contact pension co and asks for the cash equivalent value. You then split the pot as per your argument. Other things to take into account are ongoing claims vs final settlement.
Personal items inc bikes are not included under £1k or thereabouts, you'll need to check.
No 1 rule of bikes: Whatever the price, tell your partner it was about £500 😂
Now I have a question out of interest. Hypothetically, what would happen if you married 5 times over a lifetime, having a kid with each wife and divorcing them all. Alongside this you only earned the uk average salary. Would you get £0 to live on after paying fees?
