Posted July 12th, 2010
As a Resolution Accredited Independent Financial Adviser (IFA) I am often asked to provide a summary of how we can work with clients through the Collaborative Law process. Below is taken from a flyer which is provided to the lawyers at the Greater Manchester POD.
HOW THE IFA WILL WORK WITH YOU AND YOUR SOLICITOR:
IFAs will be accredited by Resolution to work in the collaborative area, having undertaken training on the technical and cultural aspects involved, and passed an examination on the subject.
The IFA acts as a ‘financial neutral’ – rather than representing one party, their role is to assist all parties in highlighting issues and providing information that enables the collaborative process to move quickly and smoothly.
In addition to their specialist technical knowledge, IFAs can outline options to parties and comment on risk factors (eg in terms of pension options) which solicitors are unable to do as they are not authorised to give financial advice.
IFA’s can attend a first meeting with the Solicitors present, so as to display to the parties how they may add value to the process. At your discretion, IFAs can subsequently meet you without your solicitor being present, so as to control total costs.
EXAMPLES OF WHERE THE IFA IS ABLE TO HELP:
• Tax efficiency and mitigation if assets or investments are being sold as part of the agreement (eg ISAs, Capital Gains Tax issues).
• Pension-sharing issues under occupational final salary schemes, for both the scheme member and the ex-spouse.
• Issues surrounding individual pensions, including retirement options.
• The cost of replacing items under an employee benefits package for the ex-spouse (eg life cover, critical illness cover, private medical insurance).
• Mortgage availability and costings in relation to the marital home.
• Assessment of endowment policies and the options going forward.
• General financial education
• Budgeting exercises and lifetime cashflow projections to determine whether the agreed settlement will be sufficient to support the financial requirements of each party over time.
If you require any further assistance, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Budgeting exercises, Capital Gains Tax, Collaborative Law, critical illness cover, Employee benefits, endowment policies, Ex Spouse, Final Salary, financial education, Financial Neutral, Greater Manchester POD, IFA, ISAs, life cover, lifetime cashflow projection, marital home, Member, Mortgage, Occupational Final Salary, Pension, Pension Sharing, POD, private medical insurance, Resolution Accredited, Resolution Accredited IFA, Settlement, Solicitor, Tax efficiency | Posted in Financial Advice |
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Posted March 29th, 2010
Of all the things that need to be understood in the context of pensions and divorce I consider this one to be the biggest. There is a major difference between the Valuation Date and the Valuation Day and it is imperative you understand it.
In England, Wales and Northern Ireland, the date on which the transfer value request, Cash Equivalent Transfer Value (CETV) or Cash Equivalent of Benefit (CEB), is received by the trustees or scheme provider becomes the Valuation Date.
This becomes the value which all of the negotiations for your settlement will be based on. For example, if you are advised by your solicitors, having received an actuary’s report, that the pension needs to be split 60:40 this will be done on the basis of the value on the Valuation Date.
However, this is NOT the value which will be used when the final benefits are calculated. The actual value will be calculated at some point within the four month implementation period and this date becomes the Valuation Day. The implementation period starts on the Transfer Day, which is the day the pension sharing order takes effect, or, if later, on the day the pension scheme has the prescribed information needed to implement the pension sharing order.
The period of time between the Valuation Date and the Valuation Day can be considerable and a lot can change in a pension during this time, which can have knock on effect on the valuation and subsequently the benefits derived from it.
If you would like to understand more about how the Valuation Date and Valuation Day might affect you and your benefits, call or email me for a confidential chat.
phil@thedivorceifa.co.uk or 0800 092 1229
Tags: Cash Equivalent of Benefit, Cash Equivalent Transfer Value, CEB, CETV, Implementation Period, Negotiations, Pension, Scheme Provider, Settlement, Transfer Day, Trustees, Valuation, Valuation Date, Valuation Day | Posted in Transfer values |
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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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