Posted September 17th, 2012
The role of solicitors and mediators during divorce is well documented and shouldn’t be taken lightly or underestimated as many self representing clients find out to their cost.
However, aside from wrangling over custody arrangements, would you leave it to either professional party to value your house during a split of assets?
No? So why is it that little or no heed is often taken in divorce proceedings with regards to the pensions?
As I stated in the above article, there are many solicitors that I work with that do have the necessary skill set to enable you to achieve a fair outcome, often calling in the necessary professionals to assist with their advice.
I have recently been contacted by two claim companies and an independent solicitor looking at past settlements and wanting referrals from me for potential claims they can investigate. They are investigating whether the true value of the pensions has been ignored, overlooked or misunderstood as part of the overall settlement.
This is no coincidence and perhaps a sign of the times but 12 years after the legislation was passed bringing pension sharing into force I am still seeing big mistakes being made.
To avoid having to go through this with your pension sharing case then please get in touch now on 01204 663904.
Posted January 21st, 2011
The lifetime allowance is back in the news and will from April 2012 reduce from £1.8m to £1.5m.
But how does the lifetime allowance work in the context of divorce and pension sharing? In particular, how does it affect pension credits and pension debits now? And how will this reduction affect pension sharing orders going forward?
Where a pension credit is awarded this becomes an asset of the new owner and will form part of their overall pension entitlement which (at some point in the future) will be tested against their lifetime allowance.
Therefore, it is advisable to check (in high value cases) to see if the amount of the credit will take them over the lifetime allowance. If it will, then they may want to consider an alternative strategy or reduce the amount of the pension share.
A pension debit does not count towards the lifetime allowance of the member whose pension was shared. This means it is only the benefits that they actually receive that will be tested against the lifetime allowance.
If already in payment, the ex-spouse can apply for an increase in their standard lifetime allowance as the pension has already been tested against the lifetime allowance. The increase factor is found by dividing the pension credit by the standard lifetime allowance in force when the pension sharing order is made.
Where a debit arises then rebuilding of lost pension may be advisable.
Future Pension Sharing Orders
With a reducing lifetime allowance it will be even more important to make checks before proceeding. The limit will be lower and therefore, potentially more people will be affected.
If this issue affects you or your client, please contact us on 0800 092 1229 or email firstname.lastname@example.org
Posted March 19th, 2010
The prescribed method of valuing a pension for divorce purposes, whether the pension rights are to be subject to pension offsetting, pension attachment or pension sharing is the Cash Equivalent Transfer Value (CETV).
The CETV is the capital value of the pension rights as calculated by the scheme actuary or the pension provider. This valuation method is used where the pension is being accrued or is not yet in payment.
Where the pension is actually in payment, a different valuation basis needs to be used. This is the cash equivalent of benefit (CEB) calculation and it does give a capital value which can be shared, offset or earmarked. If you google the Martin-Dye v. Martin-Dye judgement you can find more information out on this valuation basis.
Neither calculation (CETV or CEB) is subject to standard actuarial methods and each defined benefit scheme will use a different valuation basis.
I cannot emphasis how important understanding this aspect of pensions and divorce is to maximising your settlement. Scrutinise the value to decide whether it represents fair value.
If you need further assistance with your CETV or CEB feel free to contact me for a confidential chat.
email@example.com or 0800 092 1229