Posted January 6th, 2012
Cash Equivalent Values (CEVs) from the public sector are currently on hold.
We received further information from the actuaries we use (Bradshaw Dixon Moore) on the subject which is worth sharing here – http://www.ancillaryactuary.co.uk/home/2011/12/29/public-sector-pensions-green-shoots.html
What was interesting was that they had quite rightly in my opinion taken the decision not to continue with estimated values for pending reports. Although, this inconvenienced clients and solicitors it was an important stance to take.
I received this response from Peter Moore at BDM when further questioned.
“Publication of the transfer club factors vindicated our stance. We understand that the mortality rate changes for some schemes are material and vary by age and gender. We believe that this provides a reasonable guide as to how the CEVs will change, scheme by scheme; but want to see the actual scheme factors and some new basis valuations before we can be certain.
One of the big issues from our perspective is professional actuarial integrity. If an actuary writes a report and cannot be certain that key numbers and results are reasonable and correct, there is a professional obligation to clearly state the position. Our view is that although such a report can be produced and be compliant from an actuarial perspective, we do not feel that such a report would be acceptable to a court that would wish to place reliance on it as expert guidance – ie Expert Witness Reports. From our perspective, we want our reports to all be fully compliant and avoid reports with too many caveats.”
So if you are involved in a divorce where an old or estimated CEV is being used I would be very cautious. If you would like to discuss this issue in more depth, why not get in touch for a free, no obligation chat on 0800 092 1229 or email us advice@thedivorceifa.co.uk
Tags: Actuaries, Cash Equivalent Transfer Value, Cash Equivalent Values, CEV, CEVs, Divorce, Pensions, Pensions & divorce | Posted in Pensions & divorce |
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Posted September 26th, 2011
I have recently completed a pension sharing case where the length of time for the work from start to finish was 14 months. This is not unusual.
In this time the clients Cash Equivalent Transfer Values, and her share of them has increased by 12%. Not bad considering what the markets have done in the intervening period but more luck than judgement.
This is not always the case, and often the value of pensions etc can reduce over this period of time. So we have actually been quite lucky here.
With the implementation period being up to 4 months, it is important to get your Pension Sharing Order, Consent Order and any other documentation required by the ceding scheme to get the pension credit implemented as soon as possible. The quickest I have managed to get a pension
order and consent order implemented is less than three weeks from start to finish.
If you need assistance with your pension sharing why don’t you get in touch on 01204 663904 or email me Phil@thedivorceifa.co.uk
Tags: Cash Equivalent Transfer Value, Ceding Scheme, Pension Credit, Pension Order, Pension Sharing, Pension Sharing Case, pension sharing order, Pensions | Posted in Pension Sharing, Uncategorized |
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Posted July 12th, 2011
In one of my previous blogs “two pension schemes or one?” I regaled you with the woe filled story of the two pre-approved pension sharing orders which were subsequently rejected by the pension schemes involved.
They were arguing rather belatedly in my opinion that the two periods of service and two cash equivalent transfer values (CETVs) they had provided us with were actually on reflection part of only one scheme.
Happily we have managed to get them to see the error of their ways and they are now in process of implementing the two pension sharing orders. All’s well that ends well.
If you are struggling to implement your pension sharing order and would like some advice why not get in touch on 0800 092 1229 or email me phil@thedivorceifa.co.uk
Tags: Cash Equivalent Transfer Value, Pension Sharing, pension sharing order, Pension Sharing Orders | Posted in Pension Sharing |
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Posted May 19th, 2011
I am currently dealing with an interesting case which involves two parts of the same scheme.
Unfortunately, at outset the clients received two different cash equivalent transfer values (under separate cover) and the assumption was made that the schemes were different. This was a fair assumption at the time given that one scheme provided for money purchase benefits and the other defined benefits. An actuarial report was undertaken and it was agreed that each scheme would be shared differently (100% for the money purchase / 31% for the defined benefit).
What happened next was ridiculous. The credit member’s solicitors sent the two pension sharing orders to the scheme involved for pre-approval before submission to court and they were approved. Only when the orders were submitted to the scheme for implementation were they rejected with the scheme confirming that only one pension sharing order can be set against one pension scheme. The two schemes were in fact two sections of the same scheme.
Now we are left with the situation where we have two pension benefits which the clients have agreed to share in different ways (100% and 31%) and a single pension sharing order is too blunt an instrument to deal with sharing the benefits differently. The scheme is insisting on one pension sharing order and they will not allow for the benefits to be shared differently.
We now have to look at alternatives. The key is to check each pension benefit carefully before proceeding.
If you are experiencing difficulties with your pension sharing order and would like some advice, please do not hesitate to contact me on 01204 663904 or email phil@thedivorceifa.co.uk
Tags: Actuarial Report, Cash Equivalent Transfer Value, Defined Benefit, Money Purchase, Pension Scheme, Pension Sharing, pension sharing order | Posted in Pension Sharing |
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Posted March 2nd, 2011
This week’s ruling by the European Court of Justice on gender and insurance may have some far reaching consequences in relation to pensions and divorce. See here – http://www.bbc.co.uk/news/business-12608777
It will be interesting to see how and if this will be implemented but potentially the areas of pensions and divorce it could affect are:
- Equalisation of pension incomes.
- Underlying Cash Equivalent Transfer Value Factors.
- Final Salary & Money Purchase benefits at retirement.
- Tax Free Cash Commutations.
- Duxbury calculations?
If you have any questions on pensions and divorce, please feel free to contact me on 0800 092 1229 or email me phil@thedivorceifa.co.uk
Tags: Annuities, Cash Equivalent Transfer Value, Duxbury calculations, Equalisation of Pension, Final Salary, Pensions, Pensions & divorce, Unisex Annuities | Posted in Pensions & divorce |
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Posted February 24th, 2011
Are you struggling to understand the content of your actuarial report? Have you appointed a joint expert to report on pension sharing and now you are more confused than ever?
You are not alone. Many clients approach me with questions about their actuarial report – the percentages used, the cash equivalent transfer values and more general issues around the terminology used. You may even be thinking why have we had this report done because it has confused me even more.
The most important questions are often simple – what does it mean and how will it affect me?
Why delay? I offer a free, no obligation review of your actuarial report. I will provide you with some initial comments to help you decipher your report and give you some context to the actuary’s comments.
Why not call me now on 0800 092 1229 to arrange or send your report by email to phil@thedivorceifa.co.uk and I will let you have my thoughts.
Let me demystify your pension sharing report today.
Tags: Actuarial Report, Cash Equivalent Transfer Value, Joint Expert, Pension, Pension Sharing, Pension Sharing Report | Posted in Pension Sharing |
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Posted December 17th, 2010
Sometimes when dealing with pensions it is easy to miss the fact that additional contributions have been paid. This is because not all additional voluntary contributions (AVCs) will be reflected in the cash equivalent transfer value (CETV) being quoted.
Where AVCs are being paid on a money purchase basis they will often accrue in a separate insurance company policy alongside the main scheme benefits.
So, my advice when dealing with a final salary scheme on pension sharing is to ask the question – have any AVCs been paid? It has not been unusual for an extra £30,000 plus of CETV to account for the AVCs and like the main scheme benefits they are able to have a pension sharing order placed against them.
If you would like to discuss pension sharing and AVCs, please contact me on 0800 092 1220 or send me an email – phil@thedivorceifa.co.uk
Tags: Accrue, Additional Contributions, Additional Voluntary Contributions, AVCs, Cash Equivalent Transfer Value, CETVs, Final Salary Scheme, Final Salary Scheme on Pension Sharing, Insurance Company Policy, Main Scheme Benefits, Money Purchase, Money Purchase Basis, Pension Sharing, Pension Sharing and AVCs, pension sharing order | Posted in Pension Sharing |
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Posted October 21st, 2010
I am often asked by clients what is the difference between equality of capital and equality of income calculations. And why is it important to ensure that before instructing an actuary each party understands what the calculations might mean for them.
To illustrate this issue I have provided explanations of each calculation below together with a worked example.
Equality of capital
This is the simplest approach to sharing pensions. It often mirrors what has happened elsewhere in deciding how to split the other marital assets. So, lets assume that a 50:50 division of capital is agreed.
Example 1 – Equality of Capital (50:50) Male aged 65 / Female age 60
Before
Male CETV – £200,000
Female CETV – £0
After
Male CETV – £100,000
Female CETV – £100,000
Male – annuity income – £6,535 per annum*
Female – annuity income – £5,687 per annum*
(Source: The Exchange – October 2010)
*Annuity purchased is on a single life basis, 5 year guarantee with no escalation.
Result
So we have equality of capital but not equality of outcome / income.
Equality of income – same clients
This calculation attempts to rectify the outcome detailed above. It takes into account the client’s ages, health (if relevant) but most importantly the difference in sex! The key point here is that it costs more pension cash equivalent transfer value (cetv) to provide a woman with the same amount of income than it does a man.
Example 2 – Equality of Income
Before
Male CETV – £200,000
Female CETV – £0
Share needed
Male CETV – £93,050
Female CETV – £106,950
Annuity income now
Male annuity income – £6,080 per annum*
Female annuity income – £6,082 per annum*
(Source: The Exchange – October 2010)
*Annuity purchased is on a single life basis, 5 year guarantee with no escalation.
Result
So by sharing pension 46.53%:53.48% the client’s have equality of income.
This is a very simplistic case but I think it illustrates the issue nicely. Where the pensions involved are final salary or defined benefit, the client is in ill health or there are major differences in their ages (i.e. 10 years plus) then these issues complicate the calculations and it is necessary to get professional actuarial advice.
Should you wish to discuss equality of capital versus equality of income, please contact us here.
Tags: 5 year guarantee, 50:50, Actuary, Annuity, Calculation, Cash Equivalent Transfer Value, CETV, Defined Benefit, Division of Capital, Equality of Capital, Equality of Income, Equality of Outcome, Final Salary, Ill Health, Marital Assets, no escalation, Pension, Pension Sharing, Sharing Pension, Sharing Pensions, Single Life Basis | Posted in Pension Sharing |
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