Case Study 8 - How to reduce pension sharing by £68,000!

Background

  • Our client, Mr A approached us to assist with the division of pensions in his divorce.
  • His pensions were significantly more valuable than Mrs A’s pensions on a cash equivalent transfer value (CETV) basis (£600,000 v £140,000).

Concerns

  • Mrs A’s existing IFA had put forward an approach whereby the division of the pensions would be done on a capital value
    basis. i.e. £600,000 – £140,000 / 2 = £230,000.
  • Therefore, Mrs A would receive a pension share of c.£230,000 or 38%.
  • Mr A was concerned that this was too simplistic and unfair to him because his benefits were in personal pensions whilst Mrs A’s pension was final salary.

What We Did

  • We reviewed the CETVs and ascertained that Mrs A’s pension was an NHS Pension.
  • Their CETV calculations are on a single life basis.
  • This undervalues the true pension benefits which are joint life benefits.
  • In addition, providing like for like benefits for Mr A is expensive using his personal pension (He needs much more capital to
    produce a similar income to Mrs A).
  • We put forward equalising the pensions on an income basis as being a more fair approach to both.

The Results

  • Mrs A’s IFA accepted the approach.
  • He was able to negotiate a 27% pension share to be taken from his benefits or £162,000.
  • Ultimately, he was able to retain a further £68,000 of his pension capital.

What Our Clients Say...

I learned a lot from him about the different pension options available...
“I came across Phil O’Connor of WhiteWell Financial Planning last year whilst browsing Google after I started divorce proceedings and needed some financial advise.

Throughout that time and up to the present – Phil has been incredibly helpful in providing me with information and giving me guidance on certain procedures regarding Pension Sharing Options and setting up a new pension. I learned a lot from him about the different pension options available. He very patiently answered many and varied questions and helped me in taking the right decision – finally! I wouldn’t hesitate in recommending him and his company.”
R.S. - North Wales

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