Pensions / Divorce - Cash Equivalent Transfer Value?
Discussion
Hi all,
The internet is confusing me (easily done...) so I thought I might consult the wisdom of the trusted denizens of PH!
On the Form D81 for sorting out finances post-divorce, one of the boxes in the table of 'Capital' asks for:
"Pensions valuation including the Additional State Pension (cash equivalent)".
Is the 'cash equivalent' part referring to a 'Cash Equivalent Transfer Value' / CETV?
These webpages I found suggest it is:
https://www.justanswer.co.uk/family-law/h5d1q-fill...
https://divorce.wikivorce.com/advice/financial/pen...
https://divorce.wikivorce.com/advice/legal-service...
If it is, is this only something that can be provided from the pension companies following a written request?
Or are they usually on the pension companies' 'user admin' websites?
I guess I'm confused because one of the pension admin websites for a pension in question has a "Total Transfer Value" (rather than a 'CETV'), so it is not very clear...
Thank you in advance for any assistance!
The internet is confusing me (easily done...) so I thought I might consult the wisdom of the trusted denizens of PH!
On the Form D81 for sorting out finances post-divorce, one of the boxes in the table of 'Capital' asks for:
"Pensions valuation including the Additional State Pension (cash equivalent)".
Is the 'cash equivalent' part referring to a 'Cash Equivalent Transfer Value' / CETV?
These webpages I found suggest it is:
https://www.justanswer.co.uk/family-law/h5d1q-fill...
https://divorce.wikivorce.com/advice/financial/pen...
https://divorce.wikivorce.com/advice/legal-service...
If it is, is this only something that can be provided from the pension companies following a written request?
Or are they usually on the pension companies' 'user admin' websites?
I guess I'm confused because one of the pension admin websites for a pension in question has a "Total Transfer Value" (rather than a 'CETV'), so it is not very clear...
Thank you in advance for any assistance!
CETV is "cash equivalent transfer value" so, yes, it's the transfer value! You can always get a CETV calculated by going to the pension provider, which will be an insurance company or similar for a personal pension or a SIPP, for example, or from the trustees/scheme manager for a company sponsored pension scheme. Best done in writing but a telephone call may do it. I doubt it can be requested online, although maybe if the pension is in a straightforward insurance policy it could be that the CETV equals the fund value in the policy at any time. So, how to make a request is source dependent.
CETV's from DB schemes are guaranteed for 3 months and then they expire. You can request one CETV calculation per year for free. Any more frequently and the provider can make a charge, and that may be more expensive than you expect..
You mention pensions and divorce...it's a minefield. Legislation provides for each person's pension values to be declared and "shared" and this is not straightforward at all. Lots of pitfalls. Many solicitors haven't a clue about this topic and get their advice wrong (costly!). Some solicitors even use specialist firms to clarify the pension situation of the potential divorcees.
R.
CETV's from DB schemes are guaranteed for 3 months and then they expire. You can request one CETV calculation per year for free. Any more frequently and the provider can make a charge, and that may be more expensive than you expect..
You mention pensions and divorce...it's a minefield. Legislation provides for each person's pension values to be declared and "shared" and this is not straightforward at all. Lots of pitfalls. Many solicitors haven't a clue about this topic and get their advice wrong (costly!). Some solicitors even use specialist firms to clarify the pension situation of the potential divorcees.
R.
Cash equivalent of a defined contribution pension is easy, it'll be the fund value.
For DB pensions the scheme will provide a CETV.
If you need a cash equivalent value for the state pension you'll need an actuary.
As has been said, it can be a complex area that solicitors don't always fully understand. If there are several pensions involved, especially a mix of DC and DB, it can be advantageous to speak to an IFA experienced with pensions and divorce to work out the best way of sharing them.
For DB pensions the scheme will provide a CETV.
If you need a cash equivalent value for the state pension you'll need an actuary.
As has been said, it can be a complex area that solicitors don't always fully understand. If there are several pensions involved, especially a mix of DC and DB, it can be advantageous to speak to an IFA experienced with pensions and divorce to work out the best way of sharing them.
Many thanks for the replies, it is much appreciated
This would be much easier if the chap I'm helping could afford to hire a solicitor / IFA to assist!
I regret that I'm not sure I'm any clearer...
lol
I just feel like I'm asking questions without a clear understanding of how it all fits together, which I hate!
I'm pretty sure the chap I'm helping is only in Defined Contribution schemes, as Defined Benefit are (were) 'Final Salary' schemes, weren't they? Which have all gone the way of the dinosaurs, other than for those of a certain age lucky enough to have set one up when they were a thing (pre-mid-90s?)
lol
The chap in question only has a couple of small pensions (you couldn't even buy a small family hatchback at today's crazy prices with what appears to be the valuations put together) so it all seems an enormous effort for little benefit... but I guess that a judge will be used to seeing vast pension pot sums so will realise that this pot is too small to even piss in lol
If the 'fund value' of a DC scheme is the 'transfer value' (e.g. contributions + interest - losses - fees), it would seem very easy to just enter the current overall value?? but the lack of the words 'cash equivalent' in the scheme blurb does not make it clear...
re: the State Pension, I stumbled on this page on the GOV.UK website:
https://www.gov.uk/government/publications/applica...
which suggests both parties 'should' get a State Pension valuation and include it in the finance calculations, but it seems ridiculous when both parties are three decades from retirement, neither are wealthy or in lucrative jobs, and both are seeking a 'clean break' Order - surely the figures will be near-identical for each and therefore cancel each other out??
I think the only option is to specifically ask the companies in question to put into writing what they consider the Cash Equivalent ('Transfer Value' or not) so there is a paper trail should the court wish to see it...
It would be nice if there was an industry standard in terms of information presented and terminology used!
This would be much easier if the chap I'm helping could afford to hire a solicitor / IFA to assist!
I regret that I'm not sure I'm any clearer...
lolI just feel like I'm asking questions without a clear understanding of how it all fits together, which I hate!
I'm pretty sure the chap I'm helping is only in Defined Contribution schemes, as Defined Benefit are (were) 'Final Salary' schemes, weren't they? Which have all gone the way of the dinosaurs, other than for those of a certain age lucky enough to have set one up when they were a thing (pre-mid-90s?)
lolThe chap in question only has a couple of small pensions (you couldn't even buy a small family hatchback at today's crazy prices with what appears to be the valuations put together) so it all seems an enormous effort for little benefit... but I guess that a judge will be used to seeing vast pension pot sums so will realise that this pot is too small to even piss in
lolIf the 'fund value' of a DC scheme is the 'transfer value' (e.g. contributions + interest - losses - fees), it would seem very easy to just enter the current overall value?? but the lack of the words 'cash equivalent' in the scheme blurb does not make it clear...
re: the State Pension, I stumbled on this page on the GOV.UK website:
https://www.gov.uk/government/publications/applica...
which suggests both parties 'should' get a State Pension valuation and include it in the finance calculations, but it seems ridiculous when both parties are three decades from retirement, neither are wealthy or in lucrative jobs, and both are seeking a 'clean break' Order - surely the figures will be near-identical for each and therefore cancel each other out??
I think the only option is to specifically ask the companies in question to put into writing what they consider the Cash Equivalent ('Transfer Value' or not) so there is a paper trail should the court wish to see it...
It would be nice if there was an industry standard in terms of information presented and terminology used!
Edited by RSTurboPaul on Tuesday 15th February 17:05
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