Case Study 8 - How to reduce pension sharing by £68,000!
- 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).
- 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.
- 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...
Phil’s assistance has been, and continues to be invaluable...“I have been a family lawyer for nearly 20 years. Pensions have until recently been dealt with on CETV but over the last 2 years the Court’s are becoming more actively involved and now look behind the CETV to the actual benefits of schemes and how these can be properly divided on divorce.
Phil’s assistance has been, and continues to be invaluable. He has advised on a number of complex cases with significant pension assets which has meant I am absolutely reassured my client’s are being properly advised from the outset by someone who not only is clearly an expert in their field but explains things in a user friendly way. Phil assistance in an advisory capacity has helped my client’s to make sure they not only get the best result but also to ensure, moving forward, we can look at not only the pension share but where is the best place for that to be held to maximise the return.
Phil is always available to advise and answer any questions I have, including helping to decipher actuary reports to my client’s best advantage. I would genuinely and wholeheartedly recommend his services to any family lawyer and would say he should be involved in every case where there are pensions involved.”
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