I’m in the process of divorcing, I don’t recommend it as anything other than a last resort.

My question is about pension splitting. We have the Cash Equivalent Transfer Values for our pensions schemes. One is NHS, one is Teachers pension. The NHS one is three times the teachers one and both have about 15 years of payments into them.

Option 1 is just to use the CETVs to split things. Advantages: quicker and easier and ‘free’. Disadvantages: probably not fair, someone will lose out.

Option 2 is to get an Actuarial Adjusted figure. Advantages: Will be ‘fair’ Disadvantages: £2500 to the actuary, takes 5 months.

My question is: has anyone had an actuarial adjusted figure in a situation like this? Does the value come out higher or lower than the CETV? Is using the CETV values a stupid idea?

I’m not looking to ‘win’, I just don’t want either of us to ‘lose’ in a significant way, but I also want things to keep moving forward and in an amicable way.

Thanks in advance.

Bump. Anyone?

….I suspect having a quick Google ‘n’ read of old Mumsnet threads on the topic would be enlightening… (FX: reads a thread) my goodness what a minefield!
But one factor is that say a DB pension has a CETV of £X.
Someone given £X/2 to put into a DC pension is unlikely to get as good an income from it as the income from (half) the DB pension.
That’s one thing they’ll look at.

I still curse the day Young Me didn’t sign up to a DB scheme at a company I was at for 6 years – the equivalent pension I would be due from them would cost me one or two hundred thousand to get from a DC pot. Oh. Well.

One option is to not split or adjust, both of you keep your own pensions

But obviously that’s more attractive for the one with the higher value

One option is to not split or adjust, both of you keep your own pensions

But obviously that’s more attractive for the one with the higher value

That’s the one in the back of my head – both worked part time, the one who was part time the longest was on a much higher salary, it “should” be relatively equal. Presumably if you both agree and its rules equitable enough.

Can a spouse claim a share of a pension from a private scheme that you had left prior to the relationship starting? Apologies for the slight hijack

Not true that CETV will give you a lower pension once reinvested. But you need to be able to manage the investment and keep costs low for it to work and even then you are facing the full risks of investing in volatile assets. Moving from DB is definitely a step up in risk and complication.
The CETV is already an actuarial calculation – do you have any reason to believe that it is wrong and needs checking by another actuary? You could contact the pension administrator and ask for details of how they work them out.
I have no idea why you say it would take 5 months to get an actuary to do the calculations – I’d be surprised if it takes more than an afternoon! The high fee is because of the liability that the actuary takes on for giving advice.

I’m literally needing this answer too…

Looking at offsetting equity in the house against some pension….

Need to know if, say 50k cash is less or more valuable than 50k pension!

DrP

One option is to not split or adjust, both of you keep your own pensions

But obviously that’s more attractive for the one with the higher value

I used CETV and did this, on advice from solicitor. Obviously it only works if there’s a house or cash savings you can use to offset one against the other. I wouldn’t say it’s more attractive for the one with the higher value – there are downsides to both.

Basically, my ex kept a nice hefty pension in the future but had less cash to play with now (eg as a deposit for a new house). I didn’t have to buy him out of as much of the house, which meant I could afford to get a mortgage, but I don’t want to think too much about what happens when I’m old.

If you do it this way, my solicitor said, you save time and a lot of expenses in paperwork and accounting stuff. Basically add every asset up, including the pension CETVs, then divide by two. That’s your 50/50 asset split (if that’s what you’ve agreed on – if you’ve got kids and one partner has been at home with them you might consider a different split is fairer to address their long term loss of earnings potential, or you might just choose to address that through ongoing maintenance) Put your existing personal savings and pension CETVs into a column for each of you, then use shared assets or the house to even out the balance towards that value.

I’d imagine that tryting to compare the relative value of 50k cash vs 50k pension vs  50k equity comes down to personal perception of future value – 50k from a DC pension may be worth similar to 50k cash now, but you could argue that retaining 50k in value in a DB pension would be worth more to you for your future retirement. Likewise, if your house is in an area where you think future house values will markedly increase, retaining the equity in the house may represent a better deal for you. Sorry, that’s probably not at all helpful!

In terms of the OP, I too am a bit confused about the ‘actuarial adjustment’ – it’s not a thing I’ve come across in circa 10 years of working in the pensions industry, though admittedly my work has solely been in private sector pensions so this may be exclusive to public sector. For private sector, the CETV would be as titled – a Cash Equivalent Transfer Value, based around the current actuarial transfer basis of a set of assumptions on how to value the pension, as agreed between the trustees and actuary. As such, it’s already a ‘fair’ method of putting a number on the pension value for the purposes of divorce calculations. You’d then apply whatever pension sharing percentage (or other divorce agreement) to the pension and the actuary would agree how much pension would be lost from a DB benefit at date of implementation of the order, or just take the percentage in value from a DC pot.

Need to know if, say 50k cash is less or more valuable than 50k pension!

On paper the pension probably works out more valuable, but you need to look at what you need now. I needed to be able to buy the house I was in at a mortgage I could afford to pay and didn’t want to clean out my savings because they date back to when I actually earned proper money. I’ve kept a nice roof over our heads at the expense of the future. My ex has higher outgoings now and fewer savings, but gets a pension in future.

If we’d gone the route of me retaining access to his pension, I wouldn’t have been able to buy him out of the house, so I’d have had to move somewhere really crappy and I didn’t want that for the kids. I can live with the maths of that, even if technically I’ve got a lower monetary worth.

I wouldn’t spend too much time calculating every penny: ask yourself what agreement will allow you both to move forward with a quality of life you want. Especially if you’ve got kids – you’re divorced, but you’re still parents and you’ll still have to interact.

On paper the pension probably works out more valuable,

I’d say a pension (particularly a defined contribution one – however the ‘value’ of a db pension should be roughly the same) is less valuable – you may never get to see it, if you do see it you may be taxed on it, and if you want 50k more pension you can just chuck your 50k cash into a pension (assuming you’re not already at the limits), claim 20/40% tax relief and be done with it.

LOLZ,…..
It’s worth more… It’s worth less…..
EEK!!!

Basically, my ex kept a nice hefty pension in the future but had less cash to play with now (eg as a deposit for a new house). I didn’t have to buy him out of as much of the house, which meant I could afford to get a mortgage, but I don’t want to think too much about what happens when I’m old.

Basically our situation..with me keeping more pension and she keeping more house equity on sale.

My solicitor is suggesting that I get a pension actuary to figure out if the split (basically, looking at I get £50k from sale of house, in exchage of £69k of my pension pot) is fair.
However. I’m fed up with how long EVERYTHING is taking. And I could just say ‘yes’ to this NOW, adn move on with my life…Or pay £3k and wait 20 weeks for a pension actuary to come up with a figure that will create more hassle, more negotiation, and more stress….

I’m young, and realistically just want to sell our family home ASAP and me be able to buy something.
I’ve come to terms with teh fact that she’ll get sever hundred £k more from the house sale than I will, but it’s the ONLY way I culd see to get this ruddy process moving. Of course, I’ll keep most of my pension pot in exchange…
I’d rather have more cashola NOW, TBH…but hey ho…

I’f thinking I’ll have a little read online to try to guestimate if this is a decent ballpak estimate, and just go with it.
I really can’t be botherd getting an expensive pension actuay involved.

DrP

Looking at offsetting equity in the house against some pension….

Need to know if, say 50k cash is less or more valuable than 50k pension!

The courts find it hard to compare the 2. Interestingly my ex was denied any access to my pension by the judge, despite having every right to do so. I got hammered, really hammered, in the short term though.

Biggest advice is get a solicitor that knows the court you’re being dealt with. My divorce was in Salisbury, my barrister was from Oxford (as I was living near there at the time) and he was flabbergasted (as was I) by the ‘local’ perception of the law. Salisbury was back in the 1970s….

It’s a very non-black and white scenario.

I know that EVERYTHING goes through the courts via one route or another…but hopefuly we’ll just be submitting a financial form that we both agree on..rather than a “him vs her” case with barristers etc etc!

DrP

I’d say a pension (particularly a defined contribution one – however the ‘value’ of a db pension should be roughly the same) is less valuable

That’s how I’d see it. It’d cost less considerably less than 50k cash to add 50k to a pension.

Thanks everyone, that’s really useful. I was a bit self conscious about the bump but glad I did. My situation is like @drp want to move forward.

I’ll take a bit of time to read every comment more carefully and respond to people who asked more questions.

I_L_F

Right, had a better read.

I think @stwhannah and @drp have it. Better to get a solution that works than obsess over ‘fair’ since perfectly fair definitely doesn’t exist. I (we) need to move on and just as long as neither of us ‘lose’ to the point where there is acrimony then that’s a win. Kids are obviously the most important factor and it’s it’s about minimising the impact on them.

@mesh the actuary report was suggested by both my solicitor and my ex’s and in the docs I’ve read. Basically because the NHS pension is such an utter pile of poo in its admin and the variables are, apparently, very complex to work out what the actual future value of the pension would be. The actuary’s report would/will give a breakdown of how to equalise income in retirement.

Having absorbed what you’ve all contributed I’m going to suggest we just use the CETVs as part of the joint assets and split everything down the middle.

It’s amazing how draining the whole process is. And how slow. Combine those two things and the cost of getting advice means the mental load is boggling.

Thanks again for everyone’s input.

EDIT to remove a random quote that sneaked in.