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...
He started his efforts by finding out what was important to me...“Phil has given me an individual service following the courts decision to award me with several pension sharing orders, no easy task of trying to get them implemented when you are living thousands of miles away in the Far East and struggling in the fog to deal with them.
Phil impressed me from the start as he was not daunted by the fact it would not be a straight forward case. He started his efforts by finding out what was important to me, my attitudes to risk and what my goals were before making any recommendations. Phil is approachable and plain speaking who is totally dedicated to providing you with the best services and advice. I have no hesitation in recommending Phil as a trustworthy financial advisor. I now have peace of mind and am looking forward to a comfortable retirement.”
Do You Have A Question Related To This Case Study?
Use the form below to ask me anything about this case study. I promise that anything you say will be 100% confidential.