Posted October 9th, 2010
The Public Sector Pension schemes – (NHS, Police, Civil Service, Local Government, Teachers, Armed Forces) are changing the way that they increase pensions in payment and revalue pensions in deferment from being linked to the Retail Price Index (RPI) to the Consumer Price Index (CPI).
RPI and CPI are measures of UK domestic inflation which are calculated by collecting a sample of prices for a selection of goods and services.
The major difference between the two measures is that RPI includes mortgage interest costs but CPI does not. Historically, this has meant that CPI has increased at a lower rate than RPI and it is therefore, expected to do so in the future.
In pension on divorce cases this change will potentially have two main knock on effects.
- It will have a negative impact on cash equivalent transfer values – the actuarial experts I have spoken with estimate that CETVs will be potentially up to 20% to 25% lower in some situations.
- It will mean that in retirement the amount of revaluation that each parties’ pension will receive will be lower.
If you would like more information on how these changes might affect you, please get in touch.
Tags: Armed Foreces, Cash Equivalent Transfer Value, CETV, CETVs, Civil Service, Consumer Price Index, Consumer Prices, CPI, Divorce, inflation, Local Government, NHS, Pension, Pension on Divorce, Pensions, pensions in deferment, pensions in payment, Pensions on divorce, Police, Public Sector Pension Schemes, Retail Prices, Retail Prices Index, revalue pensions, RPI, Teachers | Posted in Pensions & divorce |
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Posted September 28th, 2010
The NHS has just published its schedule of charges for January 2011 onwards.
It makes interesting reading especially the near 600% increase for implementing a pension sharing order. The charge to implement a pension sharing order goes up to £2,760 from £393.62 (an increase of over 600%).
For full details on the increase to the pension sharing order costs and their other proposed charges – see here.
With the current embargo on cash equivalent transfer values slowing up divorces involving NHS Pensions (see here) there is now a clear incentive to get the pension sharing order implemented before January 2011.
However, the cash equivalent transfer value or cash equivalent of benefit calculations are not available and there is still no guidance coming from NHS Pensions.
For £50 plus VAT we are able via an actuary to provide an indicative value of the value of NHS Pensions to help negotiations.
I wonder if this is the start of increases across all the Public Sector schemes – Fire, Armed Forces, Police, Local Government and others. Is this just a cynical income raiser for the Government?
If you would like further information please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Actuary, Cash Equivalent of Benefit, Cash Equivalent Transfer Value, Divorces, Implementing a pension sharing order, NHS, NHS Pensions, pension sharing order, pension sharing order costs, Pension Sharing Orders, Public Sector Schemes, Schedule of Charges | Posted in Pension Sharing |
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Posted August 6th, 2010
The Coalition Government’s emergency budget announced that public sector pensions will in future link to the consumer prices index (CPI) rather than its current basis, the retail prices index.
This has wide reaching implications, not only for those public sector workers currently going through divorce who are unable to get cash equivalent transfer values (CETVs) or implement their pension sharing orders, but potentially, all final salary pension schemes.
The implementation of the change has been set at 3 months but this is by no means guaranteed and there is likely to be a backlog of cases. This affects all of the public sector schemes including the NHS, Fire, Police, Armed Forces, Teachers and the Local Government Pension Scheme.
It is possible to still get divorced legally but the financial settlement will not be completed without agreeing the pension settlement.
The long term implications of the move are greater. The CPI is a lower measure than RPI and so the knock on effect will be that inevitably CETVs will be lower leading to lower pension settlements.
In addition, the private sector is likely to follow suit although this will take longer as they will need to consult with their pension members.
See my comments on this in The Guardian.
For more information on this issue, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Armed Forces, Cash Equivalent Transfer Value, CETV, Coalition Government, Divorce, Emergency Budget, Final Salary Pension, Financial Settlement, Fire, Local Government Pension Scheme, NHS, Pension Settlement, pension sharing order, Pension Sharing Orders, Pensions, Pensions and Divorce, Police, Public Sector Pensions, Teachers | Posted in Transfer values |
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Posted July 28th, 2010
I am often asked what forms are needed to enable a cash equivalent transfer value (CETV) to be calculated by the NHS Pensions Agency.
To enable the NHS Pension Agency to calculate the CETV they require pay and membership details from you and your employer. NHS Pensions rely on NHS employers to provide details of pensionable pay and membership of the NHS Scheme.
The forms required depend upon whether you are a contributing member or not.
Contributing member (or leaver within the last 12 months)
Form PD2 needs completing by your employer – a separate one is required for each NHS employment. Form PD1 needs completing by you.
Once both are completed, you need to send it to NHS Pensions, Hesketh House, 200-220 Broadway, Fleetwood, Lancashire, FY7 8LG.
Non contributing member
Form PD1 only needs to be completed and returned to the above address.
Timescales
They aim to provide the CETV within 6 weeks. Note that occupational schemes have 3 months to provide the CETV. You can pay extra to receive the CETV more quickly.
To avoid delays it is important that the forms are completed accurately. I am happy to provide further information on how the NHS deals with pensions on divorce.
If you require any further assistance, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Cash Equivalent Transfer Value, CETV, Divorce, NHS, NHS Pension, NHS Pensions Agency, PD1, PD2, Pension on Divorce | Posted in NHS Pension Scheme |
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Posted November 23rd, 2009
It is often stated that Cash Equivalent Transfer Values (CETVS) are not an ideal method of calculating the true value of a defined benefit pension scheme on divorce. This is because they merely provide a snapshot of the value of a member’s pension benefit at a particular point in time.
What is most surprising is by how much these valuations can undervalue these benefits and therefore, how the unwary could find that they are losing out on potentially thousands of pounds.
I have highlighted below some examples taken from a survey done by the actuaries, Bradshaw Dixon Moore based on a sample of their own reports. The findings are startling and what is most surprising is the variations between the same schemes, particularly the Public Sector and Uniformed Services schemes.
|
Scheme
|
CETV
|
Actuarial
|
Difference
|
|
|
|
|
|
|
NHS
|
£120,000
|
£164,000
|
+28%
|
|
Local Government
|
£84,000
|
£138,000
|
+64%
|
|
Police
|
£283,000
|
£520,000
|
+84%
|
|
Army
|
£105,000
|
£394,000
|
+275%
|
|
Private Company
|
£380,000
|
£608,000
|
+60%
|
You can get the full details of their findings here. Pension-CETV-value-comparisons
I have been asked to comment recently on whether actuarial valuation reports are worthwhile and what value they add to financial negotiations. Many clients are naturally trying to reduce costs during divorce and see this as a potential cost saving.
My advice is that where defined benefits are involved, regardless of the scheme, an actuarial valuation is a necessity. By finding out the true value of the pension assets you will be in a much better position to negotiate a fairer settlement.
For information on any of the information provided here, please contact me at advice@thedivorceifa.co.uk
Tags: Actuarial Valuation Report, Army, Bradshaw Dixon Moore, Cash Equivalent Transfer Value, CETV, Defined Benefit, Divorce, Local Government, NHS, Pension, Pension on Divorce, Pension Scheme, Police, Public Sector, Settlement, Uniformed Services | Posted in Transfer values |
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