Posted August 16th, 2010
I am often asked who can request pension valuations and whether there should be a charge.
It should be noted that the valuation will only be provided to the scheme member and not their spouse. The pension scheme will usually allow for one free Cash Equivalent Transfer Values (CETV) quotation to be provided each year.
However, there are occasions when a charge will be applied and I have set out some examples below:
- When a further valuation is requested within the one year time frame.
- Where the pension is in payment. Because a pension in payment cannot be transferred a CETV is irrelevant. The correct basis is a cash equivalent of benefit (CEB) and there will be a cost.
- When the valuation is needed more quickly than the scheme’s normal turnaround. For example, the NHS pension scheme usually works to a 3 month turnaround time, although, they will provide it in less than 6 weeks for a charge of £300 plus VAT.
- When the member is within 12 months of normal retirement date.
- Servicing members of the Armed Forces Scheme who already qualify for immediate benefits as soon as they retire. For those members with reckonable service of more than 16 years for officers and 22 years for other ranks the scheme levies a charge of £150 plus VAT. Where the service is less than 16 years and 22 years respectively there is no charge.
The National Association of Pension Funds (NAPF) has set out guidance for pension scheme trustees on charges and you can find further information here. NAPF gives a range of charges for you to judge how much you are being charged against. Note that it is only guidance and that some schemes will charge more.
If you would like further information on CETVs, valuations and charges, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Armed Forces Scheme, Cash Equivalent of Benefit, Cash Equivalent Transfer Value, CEB, CETV, Charge, Divorce, Immediate benefits, NAPF, National Association of Pension Funds, NHS Pension, NHS Pension Scheme, Normal Retirement Date, Pension, Pension & divorce, Pension in Payment, Pension Scheme, Pension valuations, Reckonable service, Scheme, Scheme member, Spouse, Valuation, Valuations | Posted in Transfer values |
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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.
phil@thedivorceifa.co.uk or 0800 092 1229
Tags: Accrued, Actuarial Method, Asset, Attachment, Calculation, Cash Equivalent Transfer Value, CETV, Divorce, earmarking, Martin-Dye, offsetting, Pension, Pension in Payment, Pension Provider, Pension Rights, Scheme Actuary, Sharing, Valuation Method, Value | Posted in Transfer values |
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